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Ruling
Subject: Deduction for personal superannuation contributions
Question
Can your client claim a deduction in respect of personal superannuation contributions made to a complying superannuation fund in the 2009-10 income year under section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Advice/Answer
No.
This ruling applies for the following period
Year ending 30 June 2010
The scheme commenced on
1 July 2009
Relevant facts
During the 2009-10 income year your client made contributions into his superannuation fund (the Fund).
Your client subsequently commenced a pension with the Fund.
The Fund advised that they were not able to process your client's notice of intent to claim a deduction.
Your client has not received an acknowledgement of a valid notice of intent to claim a deduction from the trustee or provider of the Fund.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 290-150.
Income Tax Assessment Act 1997 Section 290-170.
Income Tax Assessment Act 1997 Subsection 290-170(2).
Reasons for decision
Summary
Your client has not received an acknowledgement of a valid notice of intent to claim a deduction from the trustee or provider of their superannuation fund.
Therefore, your client is not entitled to claim a deduction for the personal superannuation contribution made to the complying superannuation fund 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 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.
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.
Subsection 290-170(2) of the ITAA 1997 deals with the validity of notices and states:
The notice is not valid if at least one of these conditions is satisfied:
· the notice is not in respect of the contribution;
· the notice includes all or a part of an amount covered by a previous notice;
· when you gave the notice:
· you were not a member of the fund or the holder of the RSA; or
· the trustee or RSA provider no longer holds the contribution; or
· the trustee or RSA provider has begun to pay a superannuation income stream based in whole or part on the contribution;
· before you gave the notice:
· you had made a contributions-splitting application (within the meaning given by the regulations) in relation to the contribution; and
· the trustee or RSA provider to which you made the application had not rejected the application.
In regards to a notice of intention to claim a deduction Taxation Ruling TR 2010/1 entitled 'Income tax: superannuation contributions' (TR 2010/1) states at paragraph's 272 to 273:
272. It is the Commissioner's view that any superannuation benefit paid from a superannuation interest may affect the validity of a notice of intention to deduct a contribution. In particular, the Commissioner takes the view that any superannuation income stream commenced from a superannuation interest is based 'in whole or in part on' a contribution made to that superannuation interest. This is so regardless of whether the value of the superannuation income stream is less than the value of the interest as reduced by the relevant year's contributions. Further, any superannuation lump sum paid from the interest reduces the contributions held by the superannuation provider.
273. This approach is taken because it is consistent with the integrity of the rules that determine how superannuation benefits are taxed. Subsection 307-125(1) states that the tax free and taxable components of a superannuation benefit are worked out by first determining the proportions of the value of the superannuation interest that the components represent and then applying those proportions to the benefit. Paragraph 307-125(3)(a) states that, in the case of a superannuation income stream, the value of the superannuation interest and the amount of each of its components is worked out when the income stream commences. Paragraph 307-125(3)(b) states that, in the case of a superannuation lump sum, the value of the superannuation interest and the amount of each of its components is worked out just before the benefit is paid.
274. Therefore, a deduction notice covering all of the contributions made in a particular year will be invalid if it is given by a member after any superannuation benefit has been paid to the member because the components of the benefit will have been worked out on the basis that the current year's contribution was not deductible.
In this case, during the 2009-10 income year your client made contributions into his superannuation fund (the Fund).
Your client subsequently commenced a pension with the Fund and advised that they were not able to process your client's notice of intent to claim a deduction.
Not withstanding the above, section 290-170 of the ITAA 1997 requires that the trustee or provider of the superannuation fund must have given an acknowledgement of a valid notice of intent to claim a deduction.
The legislation itself is quite specific. It allows a deduction, subject to the necessary requirements being met and does not contain a discretion that can be exercised by the Commissioner.
As your client has not received an acknowledgement of a valid notice of intent to claim a deduction from the trustee or provider of the Fund section 290-170 of the ITAA 1997 has not been satisfied.
As all conditions under section 290-150 of the ITAA 1997 have not been satisfied your client is not entitled to claim a deduction for the personal superannuation contribution made to the Fund in the 2009-10 income year.
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