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Edited version of private ruling
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Ruling
Subject: Superannuation fund contributions
Question
Is the amount mistakenly transferred from an account of the Fund to your personal bank account a superannuation contribution?
Advice/Answers
No.
This ruling applies for the following period
Year ending 30 June 2011
The scheme commenced on
1 July 2010
Relevant facts
You intended to carry out the following transactions to pay for the purchase of assets by your self managed superannuation fund (the Fund):
· transfer an amount (the Amount) from the Fund's bank account (Account 1) to another of the Fund's accounts held with that bank (Account 2).
· transfer the Amount from Account 2 to the Fund's investment account held with another bank (Investment Account).
You explained that the reason for the above arrangement is due to the fact that amounts cannot be transferred directly from the Account 1 to another bank.
You made an error and the Amount was transferred from Account 1 to your personal bank account.
The transaction was reversed and the monies were returned to the Account 1 on the same day.
The Amount was then correctly transferred to Account 2, and then from the Account 2 to the Investment Account to pay for the purchase of the assets.
These account transfers were evidenced by the account statements provided.
Relevant legislative provisions
Income Tax Assessment Act 1997
Reasons for decision
Summary of decision
The repayment of the Amount from your personal account to the Account 1 increased the capital of the Fund. However, the Amount was not provided by you for the purpose of benefitting members of the Fund but to rectify an error you made, that is, the incorrect transfer of the Amount to your personal bank account. Therefore, the Amount is not a superannuation contribution.
Detailed reasoning
Taxation Ruling 2010/1 entitled 'Income tax: superannuation contributions' (TR 2010/1) sets out the Commissioner's view on what would constitute 'contributions' to a superannuation fund, In paragraphs 4 and 6 to 8 the Commissioner states:
4. In the superannuation context, a contribution is anything of value that increases the capital of a superannuation fund provided by a person whose purpose is to benefit one or more particular members of the fund or all of the members in general.
…
6. Not every increase in the capital of a fund is a superannuation contribution as a person who increases a fund's capital must have the purpose of benefiting one or more particular members of the fund or all of the members in general.
7. A person's purpose is the object which they have in view or in mind. Generally, a person will be said to intend the natural and probable consequences of their acts and likewise their purpose may be inferred from their acts. This is a determination of a person's objective purpose, not their subjective intention.
8. A person will not normally have a purpose of benefiting a member of the fund if the transaction they carry out is in no way dependent upon the identity of the other party as a superannuation provider or they are simply fulfilling the terms of a contract or arrangement entered into on a commercial or arm's length basis.
An objective determination of a person's purpose may in some cases lead to the conclusion that the person's purpose is to benefit one or more particular members of the fund or all of the members in general. This may occur when a transaction or arrangement:
· is entered into because of a connection or relationship between the person and the superannuation provider or
· cannot be explained by reference to commercial or arm's length dealings.
In general terms, the Commissioner considers that the matter of whether an amount is a superannuation contribution is determined by having regard to whether a superannuation provider is given something of value and whether what is given is given for a particular purpose.
From the above it is clear that the Commissioner considers that a contribution is anything of value that increases the capital of a superannuation fund provided by a person whose purpose is to benefit one or more particular members of the fund or all of the members in general.
In this case, it is clear that the repayment of the Amount from your personal bank account to the Account 1 increased the capital of the Fund. However, the Amount was not provided by you for the purpose of benefitting members of the Fund but to rectify an error you made, that is, the incorrect transfer of the Amount to your personal bank account.
The facts show that you rectified the error and then completed the intended transaction on the same day that the error was made. Your immediate rectification demonstrated the bona fide nature of the error.
Therefore, the Amount mistakenly transferred from the account of the Fund to your personal bank account is not a superannuation contribution.
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