ATO Interpretative Decision

ATO ID 2002/761

Superannuation

Superannuation Contributions Tax: current year losses and the calculation of adjusted taxable income
FOI status: may be released

This version is no longer current. Please follow this link to view the current version.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

For the purposes of calculating a member's adjusted taxable income (ATI) under the provisions of the Superannuation Contributions Tax (Assessment and Collection) Act 1997 (SCTA), can current year losses result in a negative taxable income for the financial year?

Decision

No. Current year losses cannot result in a negative taxable income for the financial year for the purposes of calculating ATI under the SCTA.

Facts

The member reported a loss in their income tax return for the relevant financial year.

The member's taxable income was nil, as per their non-taxable advice for the relevant financial year.

The member received a superannuation contributions surcharge assessment in respect of surchargeable contributions made to the member's superannuation provider.

In calculating the member's ATI, the business loss was not deducted from the member's nil taxable income.

Reasons for Decision

The calculation of ATI is determined with reference to section 7A or 7B of the SCTA, depending on the circumstances of each particular case. Both sections include a reference to 'taxable income'.

In determining what constitutes 'taxable income', section 43 of the SCTA refers to the member's taxable income of that year of income 'as assessed under the Income Tax Assessment Act'.

According to subsection 6(1) of the Income Tax Assessment Act 1936, 'taxable income' has the same meaning as in the Income Tax Assessment Act 1997 (ITAA 1997).

'Taxable income' is discussed in section 4-15 of the ITAA 1997, which explains the three steps in its calculation, namely:

Step 1: add up all your assessable income for the income year;
Step 2: add up your deductions for the income year; and
Step 3: subtract your deductions from your assessable income (unless they exceed it). The result is your taxable income. (If the deductions equal or exceed the assessable income, you don't have a taxable income).

As such, where a member's deductions for an income year equal or exceed their assessable income for that year, their taxable income for the financial year is assessed as $0. Current year business losses therefore cannot result in a negative taxable income.

Where taxable income is assessed as $0 then the member's adjusted taxable income is generally $0 plus the total member surchargeable contributions plus the member's reportable fringe benefits total.

Date of decision: 16 May 2002

Year of income: Year ended 30 June 1999

Legislative References:
Income Tax Assessment Act 1997
section 4-15

Superannuation Contributions Tax (Assessment and Collection) Act 1997
   section 43
   section 7A
   section 7B

Keywords
Superannuation contributions tax
Adjusted taxable income
Adjusted taxable income - superannuation contributions surcharge
Losses

Business Line: Superannuation

Date of publication: 31 July 2002

ISSN: 1445-2782

history

	Date:	Version:
You are here →	16 May 2002	Original statement
	15 December 2006	Archived

Copyright notice

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).