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Ruling

Subject: Personal superannuation contributions

Question

Can you claim a deduction in the 2009-10 income year under section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997) for personal superannuation contributions which were receipted by the superannuation fund in the following income year?

Advice/Answers

No.

This ruling applies for the following period

Year ending 30 June 2010

The scheme commenced on

30 June 2010

Relevant facts

You are a sole trader.

In the 2009-10 income year you made personal superannuation contributions.

You then made a further personal superannuation contribution (the Contribution) to your superannuation fund.

Upon submission of notice of intent to claim a deduction for the 2009-10 income year and subsequent correspondence you were advised that your superannuation fund could not issue a claim notice for the requested amount.

Your superannuation fund have advised that they do not perform an EFT sweep each day and the final sweep for the 2009-10 income year was performed before your superannuation fund received the Contribution.

The Contribution was received by your superannuation fund in the 2010-11 income year.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 290-150

Income Tax Assessment Act 1997 Subsection 290-150(3)

Reasons for decision

Summary of decision

The legislation itself is quite specific. It allows a deduction, subject to the necessary requirements being met, only for the income year in which the contributions have been made. It does not contain a discretion that can be exercised by the Commissioner to allow a deduction for the relevant year of income where the contributions are actually made in a later year of income.

In this case the Contribution was not made in the 2009-10 income year. As the Contribution was made in the 2010-11 income year you are not entitled to claim a deduction for the Contribution in the 2009-10 income year.

Detailed reasoning

Personal deductible superannuation contributions:

A person can claim a deduction for personal contributions made to a superannuation fund for the purpose of providing superannuation benefits for themselves under section 290-150 of the ITAA 1997.

A person can only claim a deduction for personal contributions made to a superannuation fund where all conditions under section 290-150 of the ITAA 1997 have been satisfied.

Section 290-150 of the ITAA 1997 states:

You can deduct a contribution you make to a superannuation fund, or an RSA, for the purpose of providing superannuation benefits for yourself (regardless whether the benefits are payable to your SIS dependants if you die before or after becoming entitled to receive the benefits).

However, the conditions in sections 290-155, 290-160 (if applicable), 290-165 and 290-170 of the ITAA 1997 must also be satisfied for you to deduct the contribution.

You can deduct the contribution only for the income year in which you made the contribution.

· if the contribution is attributable in whole or part to a capital gain from a CGT event:

· if you disregarded all or part of the capital gain from the CGT event under subsection 152-305(1) of the ITAA 1997 and you were under 55 just before you made the choice mentioned in that subsection - you cannot deduct the contribution to the extent that it is attributable to the capital gain; or

· if a company or trust disregarded all or part of the capital gain from the CGT event under subsection 152-305(2) of the ITAA 1997 and you were under 55 just before the contribution was made - you cannot deduct the contribution to the extent that it is attributable to the capital gain.

Subsection 290-150(3) of the ITAA 1997 clearly states that a taxpayer may only deduct contributions in the income year in which they are made.

Taxation Ruling TR 2010/1 Income tax: superannuation contributions (TR 2010/1) sets out the Commissioner's view on contributions made to a superannuation fund, an approved deposit fund or a retirement savings account.

Item 2 of paragraph 13 of TR 2010/1 states,that if funds are transferred by making an electronic transfer of funds to the superannuation provider, then the contribution is made when the funds are credited to the superannuation provider's account.

In relation to when a superannuation contribution is made TR 2010/1 goes on to state in paragraphs 182 to186:

182. A superannuation contribution is made when the capital of the fund is increased. As explained in paragraphs 183 to 210 of this Ruling, the contribution may be made when an amount is received, or ownership of an asset is obtained or the fund otherwise obtains the benefit of an amount.

Contributions of funds

183. A contribution of funds as cash or an electronic funds transfer, is made when the amount is received by the superannuation provider or credited to the relevant account.

184. It has been suggested that a contribution made by electronic funds transfer may occur as soon as the contributor has done everything necessary to effect a payment. The Commissioner does not accept that is sufficient to increase the capital of the fund.

185. Electronic payment systems operate through contractual arrangements between the:

· payer and payer's financial institution;

· payer's financial institution and payee's financial institution; and

· payee's financial institution and payee.

186. When a financial institution agrees to accept a payment instruction it notifies the receiving institution of the details of the payment. In Australia there are several different clearing systems for the transferring of information and netting of amounts to be transferred between institutions. The clearing rules of these systems bind the financial institutions but not the customers. Most small payments between institutions are not processed in real time but are subject to deferred net settlement which occurs overnight. As such, it is not until an amount is credited to a bank account of the superannuation provider that a contribution will be taken to be made.

From the above, it can be said that a fund member is only taken to have made a contribution to their superannuation fund when the superannuation fund receives it.

The legislation itself is quite specific. It allows a deduction, subject to the necessary requirements being met, only for the income year in which the contributions have been made. It does not contain a discretion that can be exercised by the Commissioner to allow a deduction for the relevant year of income where the contributions are actually made in a later year of income.

In this case you made personal superannuation contributions in the 2009-10 income year. You then made a further personal superannuation contribution (the Contribution) to your superannuation fund.

Your superannuation fund has advised that they do not perform an EFT sweep each day and the final sweep for the 2009-10 income year occurred before they received the Contribution. As a result, your superannuation fund received the Contribution in the 2010-11 income year.

Therefore, the Contribution was not made in the 2009-10 income year. As the Contribution was made in the 2010-11 income year you are not entitled to claim a deduction for the Contribution made to your superannuation fund in the 2009-10 income year. However, you may be able to claim a deduction for the Contribution in the 2010-11 income year.

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