Edited version of private ruling

Authorisation Number: 1011539567226

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Ruling

Subject: Deduction for Personal Superannuation Contributions

1. Was a 'notice of intent to deduct contributions' in relation to the 2007-08 income year acknowledged by the trustee of a superannuation fund in accordance with subsection 290-170(1) of the Income Tax Assessment Act 1997 (ITAA 1997)?

No.

2. Is your client eligible to claim a deduction in respect of your client's personal superannuation contributions for the 2007-08 income year under section 290-150 of the ITAA 1997?

No.

This ruling applies for the following period:

Year ended 30 June 2008.

The scheme commences on:

1 July 2007.

Relevant facts and circumstances

Your client, who is under 55 years of age, has a superannuation account in a complying superannuation fund (the fund).

Your client made personal contributions to the fund in the 2007-08 income year. The amount of these contributions is made up of several monthly contributions and a single contribution. In a letter you sent to the fund, you attached your client's cheque for this contribution and advised that it was to be treated as a personal deductible contribution made to your client's account.

Your client was provided with a pre-printed Notice of intent to claim a tax deduction for personal superannuation contributions form to be completed and returned to the fund in support of an intention to claim a deduction for any personal contributions made in the 2007-08 income year.

Your client completed, signed and dated the form. On this form your client stated an intention to claim a deduction for the entire amount of the contributions your client made to the fund in the 2007-08 income year.

It was indicated in the information you provided that the completed notice of intent (the notice) was posted to the fund.

Your client's income tax return for the 2007-08 income year was lodged with the Australian Taxation Office (ATO). Your client claimed a deduction in respect of the personal contribution in the return for this income year. An income tax assessment for this income year was issued to your client and the deduction was allowed in this assessment.

You held an interview with your client to review the investment in the fund.

During the interview your client advised that no correspondence had been received from the fund in relation to the notice. You obtained a copy of the notice, and you advised that you would follow up with the fund the lack of an acknowledgment of the notice.

After this interview you telephoned the fund. During this telephone conversation you were advised that nothing had been received from your client. Arrangements were also made for a new notice form to be sent to your office.

After this conversation you arranged another appointment with your client for the new form to be signed. Your client was concerned about having to sign it, and your client stated that the notice was posted to the fund.

Several days later you held another interview with your client. Your client could not understand why the notice had not been received by the fund, as your client signed everything that left the office. After this interview you also telephoned the fund on the same day. During this telephone conversation you were advised you that the fund had not received a tax questionnaire or any tax deduction forms from your client for tax deduction for the 2007-08 income year to be claimed. After this conversation you faxed a copy of your client's notice to the fund on the same day.

Several weeks later your client's tax agent phoned you and advised that your client had received a letter from the fund during the previous month.

In that letter the fund advised your client that that they had received your client's notice of intent to claim or vary a deduction for superannuation contributions on personal contributions made to your client's account for the 2007-08 financial year (that is, the copy of the notice you faxed to the fund as mentioned above). Your client was further advised that they were unable to process the claim for the 2007-08 financial year as 'due to Legislation' the notice was only acceptable to them until a specified date. A copy of the letter was faxed to you on the same day the letter was received by the tax agent.

On the next day you telephoned the fund to follow up that letter. Your enquiry was escalated after you had explained your concerns, and an undertaking was made to provide a response on the same day.

In a telephone conversation held several days later you were advised that the notice would not be backdated. After this conversation you emailed the fund expressing your concerns about the fund refusing to acknowledge the notice. You requested the fund to reconsider their decision.

In closing discussions with the fund, you were advised that the only way in which the fund would reverse their decision and acknowledge the notice is to obtain written authority from the ATO stating that your client is eligible to claim a deduction in respect of your client's personal superannuation contributions for the 2007-08 income year.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 290-150

Income Tax Assessment Act 1997 Subsection 290-150(2)

Income Tax Assessment Act 1997 Section 290-170

Income Tax Assessment Act 1997 Subsection 290-170(1)

Income Tax Assessment Act 1997 Paragraph 290-170(1)(a)

Income Tax Assessment Act 1997 Paragraph 290-170(1)(b)

Income Tax Assessment Act 1997 Paragraph 290-170(1)(c)

Income Tax Assessment Act 1997 Subsection 290-170(2).

Reasons for decision

Summary

The fund has refused to give your client an acknowledgment of a notice of intent to deduct contributions in relation to the 2007-08 income year. Hence, your client has not satisfied all the conditions specified in the legislation for your client to be eligible to claim a deduction for the personal contributions your client made in that income year. Therefore, your client cannot claim a deduction for the contributions covered by the notice for that income year.

Detailed reasoning

Personal superannuation contributions made in the 2007-08 income year

Where all the conditions in Subdivision 290-C of the ITAA 1997 are satisfied, a person can claim a deduction for personal contributions they make to a superannuation fund.

These conditions are explained in detail in Taxation Ruling TR 2010/1 Income Tax: superannuation contributions (TR 2010/1).

One of these conditions, in section 290-170 of the ITAA 1997, is that the person making a contribution must provide a notice of intent to claim a deduction to their superannuation fund and have received an acknowledgment from the fund trustee.

Your client made personal superannuation contributions to a complying superannuation fund (the fund) during the 2007-08 income year.

The issue is raised as to whether a 'notice of intent to deduct contributions' your client provided to the fund in relation to this income year was acknowledged by the fund trustee.

Notice of intent to deduct conditions

Subsection 290-170(1) of the ITAA 1997 provides that not only must your client give the notice to the fund, but also that an acknowledgment of receipt of the notice must be given to your client by the fund (paragraph 290-170(1)(c) of the ITAA 1997).

As noted in paragraph 1.49 of the Explanatory Memorandum to the Tax Laws Amendment (Simplified Superannuation) Act 2007 (No. 9 of 2007), the intent of the legislation is that to be eligible for a deduction for personal contributions:

… individuals must have given a notice to the trustee or RSA provider of their intention to claim a deduction by a certain time, and received an acknowledgment from the trustee or RSA provider of receipt of the notice.

Further in relation to the requirements of subsection 290-170(1) of the ITAA 1997, the Commissioner notes in paragraph 263 of TR 2010/1 that:

A person who intends to deduct their personal superannuation contributions must give to their superannuation provider a valid notice in the approved form before lodging their income tax return for the year (or within 12 months of the end of the income year if they have not lodged their return by that time). The trustee must also acknowledge receipt of the notice.

The notice concerning your client's contributions will not be valid if one or more of the following conditions in subsection 290-170(2) of the ITAA 1997 are satisfied:

(a) the notice is not in respect of the contribution;

(b) the notice includes all or part of an amount covered by a previous notice;

(c) when you gave the notice:

(i) you were not a member of the fund or the holder of the RSA; or

(ii) the trustee or RSA provider no longer holds the contribution; or

(iii) the trustee or RSA provider has begun to pay a superannuation income stream based in whole or part on the contribution;

(d) before you gave the notice:

(i) you had made a contributions splitting application... in relation to the contribution; and

(ii) the trustee or RSA provider had not rejected the application.

Notice requirements not satisfied

Your client was provided with a pre-printed Notice of intent to claim a tax deduction for personal superannuation contributions form, for your client to complete and return to the fund as it was your client's intention to claim a tax deduction for the contributions your client had made to the fund in the 2007-08 income year.

Your client completed, signed and dated the form. On this form your client stated an intention to claim a deduction for the entire amount of the contributions your client made to the fund in this income year.

It was indicated in the information you provided that the notice of intent (the notice) was posted to the fund.

In interviews you held with your client, your client expressed concern over the lack of an acknowledgment of the notice by the fund. In following up your client's concerns, you faxed a copy of the notice to the fund.

In a letter dated a number of days later, the fund advised your client that they were unable to process your client's claim for the 2007-08 financial year as the notice was only acceptable to them until 7 July 2009.

From the information you provided on behalf of your client, it would appear that the requirements in relation to a notice of intent to deduct contributions specified in paragraphs 290-170(1)(a) and (b) of the ITAA 1997 were satisfied by your client.

However, the fact that the fund has refused to acknowledge your client's notice means that the requirement in paragraph 290-170(1)(c) of the ITAA 1997 has not been met by your client.

The requirements of subsection 290-150(2) of the ITAA 1997

As the notice of intent to deduct conditions have not been satisfied, your client is not eligible to claim a deduction for the personal superannuation contributions made in the 2007-08 income year.

A deduction for your client's personal contributions was allowed under self-assessment when your client's notice of assessment for the 2007-08 income year was issued.

However, subsection 290-150(2) of the ITAA 1997 provides that the conditions in section 290-170 of the ITAA 1997 must be satisfied before your client can claim a deduction for the contributions your client made in that income year. As your client has not satisfied all the conditions in section 290-170, your client is precluded from claiming a deduction for these contributions under section 290-150 of the ITAA 1997.

Discretion

Section 290-170 of the ITAA 1997 does not give the Commissioner the power to exercise a discretion to allow a deduction where any of the requirements of this provision have not been satisfied, regardless of the reasons those requirements were not met, or the extent to which those reasons were beyond the taxpayer's control.

The Commissioner also does not have the power to exercise a discretion to grant an extension of time for a person to lodge a notice of intent under section 290-170 of the ITAA 1997.

Conclusion

Therefore, the personal contributions your client made during the 2007-08 income year are not deductible under section 290-150 of the ITAA 1997.

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