Edited version of private ruling

Authorisation Number: 1011728771603

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Ruling

Subject: Deduction for personal superannuation contributions

Question

Can you claim a deduction for personal superannuation contributions to be made in the 2009-10 income year under section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Advice/Answers

No.

This ruling applies for the following period

Year ending 30 June 2010

The scheme commenced on

1 July 2009

Relevant facts

You meet the age-related condition.

During the 2009-10 income year you paid personal superannuation contributions into a complying self managed superannuation fund.

You were an employee for the purposes of the SGAA during the 2009-10 income year

Your employment income is greater than ten percent of your total assessable income and you do not have any reportable employer superannuation contributions or reportable fringe benefits for the 2009-10 income year.

You confirm that a valid notice under section 290-170 of the ITAA 1997 will be lodged with the trustee of the Fund and that the trustee of the Fund will acknowledge that notice.

You confirm that the contributions are being made for the purpose of providing superannuation benefits to you or your dependants if you die before or after becoming entitled to the benefits.

You confirm that the deduction to be claimed under section 290-150 of the ITAA 1997 will not add to or create a loss.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 290-150.

Income Tax Assessment Act 1997 Section 290-155.

Income Tax Assessment Act 1997 Section 290-160.

Income Tax Assessment Act 1997 Subsection 290-160(1).

Income Tax Assessment Act 1997 Subsection 290-160(2).

Income Tax Assessment Act 1997 Section 290-165.

Income Tax Assessment Act 1997 Subsection 290-165(2).

Income Tax Assessment Act 1997 Section 290-170.

Reasons for decision

Summary

You are not entitled to claim a deduction for personal superannuation contributions made in the 2009-10 income year as you are an employee in that income year and more than ten percent of your assessable income, reportable employer superannuation contributions and reportable fringe benefits is attributable to your employment for that 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 Income Tax Assessment Act 1997 (ITAA 1997). However, the conditions in sections 290-155, 290-160, 290-165 and 290-170 of the ITAA 1997 must also be satisfied for the person to claim the deduction.

Complying superannuation fund condition:

The condition in section 290-155 of the ITAA 1997 requires that where the contribution is made to a superannuation fund, it must be made to a complying superannuation fund for the income year of the fund in which the contribution is made.

This condition is satisfied as your client intends to make the contribution to a complying self managed superannuation fund.

Maximum earnings as an employee condition:

The condition in section 290-160 of the ITAA 1997 requires that if a taxpayer is engaged in any activities that results in them being treated as an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992 (SGAA) then less than 10% of the total of their assessable income, reportable employer superannuation contributions and reportable fringe benefits must be attributable to those activities. Subsection 290-160(1) of the ITAA 1997 states:

This section applies if:

(a) in the income year in which you make the contribution, you engage in any of these activities:

(i) holding an office or appointment;

(ii) performing functions or appointment;

(iii) engaging in work;

(iv) doing acts or things; and

(b) the activities result in you being treated as an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992 (assuming that subsection 12(11) of that act has not been enacted).

In this case you were an employee for the purposes of the SGAA during the 2009-10 income year.

Consequently, section 290-160 of the ITAA 1997 applies to you in the 2009-10 income year.

Where section 290-160 of the ITAA 1997 applies to a person, subsection 290-160(2) of the ITAA 1997 states that:

To deduct the contribution, less than 10% of the total of the following must be attributable to the activities:

(a) your assessable income for the income year;

(b) your reportable fringe benefits total for the income year;

(c) the total of your reportable employer superannuation contributions for the income year.

This means that in order to satisfy the condition set out under section 290-160 of the ITAA 1997, your total assessable income, reportable employer superannuation contributions and reportable fringe benefits attributable to your employment must be less than 10% of your total assessable income, reportable employer superannuation contributions and reportable fringe benefits for the 2009-10 income year.

From the facts of this case it is evident that your employment income is greater than ten percent of your total assessable income and you do not have any reportable employer superannuation contributions or reportable fringe benefits for the 2009-10 income year. Consequently, section 290-160 of the ITAA 1997 will not be satisfied.

Age-related conditions:

Under subsection 290-165(2) of the ITAA 1997 the ability to claim a deduction ceases for contributions that are made after 28 days from the end of the month in which the person making the contribution turns 75 years of age.

You meet the age-related condition.

Notice of intent to deduct conditions:

Section 290-170 of the ITAA 1997 requires a person to provide a valid notice of their intention to claim the deduction to the trustee of their superannuation fund. The notice must be given before the earlier of:

· the date you lodge your income tax return for the income year in which the contribution was made; or

· the end of the income year following the year in which the contribution was made.

In addition, you must also have been given an acknowledgement of the notice by the trustee of the superannuation fund.

A notice will be valid as long as the following conditions apply:

· the notice is in respect of the contributions;

· the notice is not for an amount covered by a previous notice;

· at the time when the notice is given:

o you are a member of the fund or the holder of the retirement savings account (RSA);

o the trustee or RSA provider holds the contribution (for example, a notice will not be valid if a partial roll-over of the superannuation benefit which includes the contribution covered in the notice has been made);

o the trustee or RSA provider has not begun to pay a superannuation income stream based on the contribution; or

· before the notice is given:

o a contributions splitting application has not been made in relation to the contribution; and;

o the trustee or RSA provider has not rejected the application.

This condition is satisfied as you have stated that a valid notice under section 290-170 of the ITAA 1997 will be lodged with the trustee of the Fund and the trustee of the Fund will acknowledge that notice.

Conclusion:

In this case, as all conditions have not been satisfied, you are not entitled to claim a deduction under section 290-150 of the ITAA 1997 for the personal superannuation contributions to be made in the 2009-10 income year.

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