• Claiming a deduction after a partial rollover or withdrawal

    Special rules apply if, after you made a contribution, you made a withdrawal or rolled over part of your super.

    A super fund will no longer hold a contribution, or at least a part of it, if the member has chosen to rollover or withdraw a part of their super account held by the fund. In such a case, a notice of intent cannot be given for the entire contribution.

    A valid notice of intent will be limited to a proportion of the tax-free component of the super account that remains after the rollover or withdrawal. That proportion is the value of the relevant contribution divided by the tax-free component of the super account immediately before the rollover or withdrawal (see example below).

    Where you have made a partial rollover or withdrawal and you do not know the tax free component and value of your super interest immediately before your rollover or withdrawal, your super fund may be able to confirm these amounts for you. Alternatively, you may need to seek independent financial advice to assist you to calculate the maximum deduction amount, to ensure you lodge a valid notice.

    If you send a notice indicating that you intend to claim more than the tax-free component of what remains in your super account, that notice will be invalid.

    Attention

    If you send your fund an invalid notice of intent, your fund will not be able to acknowledge it. You will need to lodge a new valid notice and receive acknowledgment from your fund to enable you to claim a deduction for your contribution.

    End of attention

    Example of a valid notice of intent to deduct with a partial rollover

    Rachel, who is 54, has a super interest (that is, account balance) of $50,000. This interest includes tax free contributions of $10,000. She makes a $100,000 personal contribution in March 2012, which is held by the fund as a tax free component of any super benefit paid to Rachel. The value of her super interest is $150,000, with a tax free component of $110,000.

    In June 2012, Rachel rolls over $60,000 to another fund. The $60,000 rollover comprises a $44,000 tax free component and a $16,000 taxable component. The tax free component of the rollover is worked out as follows:

     Equation 1 intent to deduct with a partial rollover

    After the rollover, Rachel has a $90,000 super interest remaining. The tax free component of that remaining super interest is calculated on the same basis as the above formula, so is $66,000 (that is, $90,000 x $110,000/$150,000).

    Rachel then lodges a notice of intent in September 2012 advising that she intends to claim a deduction for the $100,000 contribution made in 2011–12. That notice is not valid. Rachel’s super fund no longer holds the entire $100,000 contribution.

    Rachel could give a valid notice of intent for an amount up to $60,000. That amount is worked out as follows:

     Equation 2 intent to deduct with a partial rollover

    End of example

     

    Attention

    For more information on how to deal with deductions involving multiple partial roll-overs, and the special rules which apply if you commence an income stream, refer to taxation ruling TR 2010/1. Go to law.ato.gov.auExternal Link and search for ‘TR 2010/1.

    End of attention
    Last modified: 19 Nov 2014QC 19310