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Ruling

Subject: Deduction for personal superannuation contributions

Question:

Are you entitled to claim a deduction for a personal superannuation contribution made in the 2009-10 income year under section 290-150 of the Income Tax Assessment Act 1997?

Answer:

No.

This ruling applies for the following periods:

Year ended 30 June 2010

The scheme commences on:

1 July 2009

Relevant facts and circumstances

You are between 50 and 65 years old.

In a meeting with your tax agent held several months before the end of the 2009-10 income year it was determined that you would make a personal contribution of [amount] into your superannuation account with a public offer superannuation fund (the Public Offer Fund) before the end of the 2009-10 income year.

The Public Offer Fund is a complying superannuation fund, and its trustee is Company A Ltd (Public Offer Fund Trustee).

Before the end of the 2009-10 income year, an 'Additional and Regular Investment Form' (the form) in respect of the personal contribution and cheques totalling [amount] were sent to the Public Offer Fund Trustee by your financial planner. The financial planner completed the form on behalf of you.

Several days later, your contribution was received by the Public Offer Fund.

In a letter dated several months before the end of the 2010-11 income year, the Public Offer Fund Trustee advised your tax agent that the form completed by the financial planner did not contain details of how these funds were to be allocated. In addition, whilst you indicated your intention to claim a tax deduction in a particular section of the form, no amount of the tax deduction was specified.

This letter also noted that, because the form was not fully completed, the financial planner's office was contacted before the end of the 2009-10 income year to determine the contribution type and to clarify the financial planner's instructions for the contribution.

The letter further noted that later on the same day, the financial planner's office telephoned the Public Offer Fund Trustee and confirmed that the contribution was to be applied to your account as a personal non-concessional contribution.

The Public Offer Fund Trustee applied the contribution to your account in accordance with the financial planner's instructions. Before the end of the 2009-10 income year, an Investment Confirmation letter in respect of the contribution was sent to you by the Public Offer Fund Trustee. In this letter, the contribution was shown as a 'Personal non-concessional contribution'.

In the second quarter of the 2010-11 income year, your account in the Public Offer Fund was closed, and your benefits were rolled over to the Fund. The Fund is a complying self-managed superannuation fund. The roll-over of your benefits to the Fund was completed several days later.

When preparing your income tax return for the 2009-10 income year, your tax agent identified that your personal contribution had been recorded as a non-concessional contribution, when the intention was to claim a tax deduction for the contribution. You have yet to lodge your tax return for this income year.

You subsequently completed a Notice of intent to claim or vary a deduction for personal superannuation contributions for the 2009-10 income year (the notice), signed and dated in the third quarter of the 2010-11 income year. In the notice you stated:

· your intent to claim the full amount of your personal contribution of [amount] as a tax deduction; and

· that this notice did not vary an earlier section 290-170 notice.

The notice was enclosed with a letter dated in the third quarter of the 2010-11 income year sent by your tax agent to the Public Offer Fund Trustee. In this letter your tax agent requested the Public Offer Fund Trustee to accept the notice and amend the contribution from non-concessional contribution to a concessional contribution because, due to an administrative error, the amount of the tax deduction you intended to claim was not completed on the form lodged by the financial planner. Your tax agent further advised that since the contribution was made, you had rolled over your superannuation account into the Fund, and that this fund 'will be held liable to forward on' the income tax in respect of the contribution.

In response, the Public Offer Fund Trustee stated that as the notice was received after the closure of your client's superannuation account in the fund, the Public Offer Fund Trustee was unable to amend the contribution as requested. Nor was the Public Offer Fund Trustee able to re-report the contribution to the Australian Taxation Office, to enable you to claim a tax deduction for the contribution under the terms of section 290-170 of the Income Tax Assessment Act 1997 (ITAA 1997).

Your tax agent lodged a complaint against the Public Offer Fund with the Superannuation Complaints Tribunal (SCT) on your behalf. In the complaint, a review of the Public Offer Fund Trustee's decision not to amend the contribution was sought.

Your tax agent was informed in a letter dated toward the end of the 2010-11 income year that the SCT was considering declining to proceed with the complaint. Your tax agent was further informed that the SCT is able to treat a complaint as withdrawn if the complaint is considered to be misconceived or lacking in substance.

In your case, your tax agent was advised that:

As your client was no longer a member of the Fund at the time of the request of [date] to treat the contribution of [contribution date] as "deductible", the Fund could not act on the request.

Your tax agent was further advised that this arises under subparagraphs 290-170(2)(c)(i) and (ii) of the ITAA 1997. Accordingly, based on this interpretation, the SCT advised that it is of the view that the complaint should be withdrawn as misconceived, because the Public Offer Fund Trustee is prevented by the legislation from acting on your notice of intent. In addition, the SCT considered that the complaint was lacking in substance.

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 Subsection 290-170(2).

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

Income Tax Assessment Act 1997 Subparagraph 290-170(2)(c)(i).

Income Tax Assessment Act 1997 Subparagraph 290-170(2)(c)(ii).

Reasons for decision

Summary

Your notice of intent to claim a deduction, for the personal contribution made to the Public Offer Fund in the 2009-10 income year, was made after you ceased to be a member of that fund. Accordingly, it is not valid.

As you have not satisfied all the requisite conditions under the legislation, you are not entitled to claim a deduction for the personal contribution made.

Detailed Reasoning

Deductions for personal superannuation contributions

A person must satisfy the conditions in section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997) before they can claim a deduction in respect of personal contributions made for the purpose of providing superannuation benefits for themselves, or their dependants after their death.

Further, subsection 290-150(2) of the ITAA 1997 provides that the conditions in sections 290-155, 290-160 (if applicable), 290-165 and 290-170 must all be satisfied before the person can claim a deduction for the contributions made in that income year. These conditions are explained in detail in Taxation Ruling TR 2010/1 entitled 'Income Tax: superannuation contributions'.

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 the person lodges their 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, the person 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 (subsection 290-170(2) of the ITAA 1997):

· 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:

· the person is a member of the fund or the holder of the retirement savings account (RSA);

· 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);

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

· before the notice is given:

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

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

In the present case, the contribution in question was made to the Public Offer Fund just before the end of the 2009-10 income year. At the time of making the contribution you completed a form entitled 'Additional and Regular Investment Form'. The current version of that form, at a particular section dealing with contribution/roll-over details, provides for the contributor to indicate the amount of the personal contribution and follows this up with the question 'Amount for which I will be claiming a tax deduction'.

It would seem, from the facts presented, that this part of the form was incomplete at the time the contribution was made. As a result, the financial planner was contacted regarding the contribution type before the end of the 2009-10 income year. In reply on the same day, the financial planner's office confirmed that the contribution made was a personal non-concessional contribution.

Notwithstanding this, it is noted that immediately below this part of the form it is clearly stated, in bold, 'Please provide a Notice of Intent to claim or vary a deduction for personal super contributions form (available from the ATO).'

Your superannuation account with the Public Offer Fund was closed in the second quarter of the 2010-11 income year and the benefits rolled to the Fund several days later.

The actual notice of intent to claim a deduction was not lodged with the Public Offer Fund until the third quarter of the 2010-11 income year. At that date, the Public Offer Fund no longer held the contributions in question. Accordingly, the notice of intent was not valid (subparagraph 290-170(2)(c)(ii) of the ITAA 1997).

In relation to this paragraph 69 of TR 2010/1 states:

A notice is not valid in certain circumstances, including a notice given, when:

· the person is no longer a member of the fund (for example, because the person's benefits have been paid to them or they have rolled over their benefits in full to another fund);

· the superannuation provider no longer holds the contribution (for example, the trustee may no longer hold a contribution where a person has been paid a lump sum superannuation benefit or had part of their benefit rolled over to another superannuation fund); or

· the superannuation provider has commenced to pay an income stream based in whole or part on the contribution.

· In light of the foregoing, it is evident that the notice of intent to deduct requirement under section 290-170 of the ITAA 1997 has not been met.

A deduction is not allowable for your client's personal contribution

As noted earlier, the conditions in sections 290-155, 290-160 (if applicable), 290-165 and 290-170 of the ITAA 1997 must all be satisfied before a person can claim a deduction for the contributions made in that income year.

As noted above, the requirements of section 290-170 of the ITAA 1997 were not met.

Consequently, you are not entitled to claim a deduction in respect of the personal contribution you made to the original fund at the end of the 2009-10 income year.

Discretion

Section 290-170 of the ITAA 1997 does not give the Commissioner the power to exercise 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 a taxpayer's control.

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

Conclusion

As the notice of intent to deduct conditions have not been satisfied, the personal contribution you made to the original fund during the 2009-10 income year is not deductible under section 290-150 of the ITAA 1997.

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