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Edited version of administratively binding advice

Authorisation Number: 1012474155310

Advice

Subject: Non-concessional contributions cap

Question 1

Is the contribution (the relevant contribution) made to the self-managed superannuation fund a non-concessional contribution for the 2011-12 income year rather than the 2012-13 income year?

Advice

No.

Question 2

Can the member make non-concessional contributions of up to $150,000 in the 2012-13 income year without triggering the 'bring-forward' provision under subsection 292-85(4) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Advice

No.

Question 3

Can the member make further non-concessional contributions of $450,000 in the 2013-14 income year by utilising the 'bring-forward' provision under subsection 202-85(4) of the ITAA 1997?

Advice

No.

This ruling applies for the following period

Year ending 30 June 2013

The scheme commenced on

1 July 2012

Relevant facts

You are currently under 60 years of age.

You are the sole member and director of a fund (the Fund) which is a self-managed superannuation fund (SMSF).

You hold a personal bank account with a retail bank (the Bank) which is denominated in a foreign currency.

You also hold another account with the Bank which is denominated in the same foreign currency and set up in the name of your SMSF (the relevant account).

In during the 20XX-YY income year, you made several contributions to the relevant account.

On the last day of the financial year (a Saturday), you attempted to transfer an amount (the relevant contribution) from your personal account into the relevant account.

The Bank's transaction processing policy in relation to bank accounts held in the same name is that any instructions received after a particular time on Friday will be processed on the following business day.

A screenshot provided shows the balance in the relevant account on the date the transfer was conducted.

Your bank statement for the Fund shows that the relevant contribution was credited to the relevant bank account in 20XX-YY income year.

You intend to make a non-concessional contribution (proposed contribution) in the following income year.

You also intend to make a

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 292-80.

Income Tax Assessment Act 1997 Section 292-85.

Income Tax Assessment Act 1997 Subsection 292-85(2).

Income Tax Assessment Act 1997 Subsection 292-85(3).

Income Tax Assessment Act 1997 Subsection 292-85(4).

Income Tax Assessment Act 1997 Section 292-410.

Superannuation (Excess Non-concessional Contributions Tax) Act 2007 Section 4.

Superannuation (Excess Non-concessional Contributions Tax) Act 2007 Section 5.

Superannuation Industry (Supervision) Regulations 1994 Subregulation 1.03(1).

Superannuation Industry (Supervision) Regulations 1994 Subregulation 7.01(3).

Reasons for decision

Summary of decision

The relevant contribution which was received by the Fund on 2 July 2012 is taken to have been made on that date. Therefore, if you make the proposed non-concessional contribution into the Fund in the 2012-13 income year, you will trigger the bring-forward provisions.

Accordingly, you will not be able to make further non-concessional contributions in the 2013-14 income year by utilising the 'bring-forward' provision under subsection 202-85(4) of the ITAA 1997 without exceeding the non-concessional contributions cap.

Detailed reasoning

Is the contribution (the relevant contribution) made to the self-managed superannuation fund a non-concessional contribution for the 2011-12 income year rather than the 2012-13 income year?

Non-concessional contributions cap

As a general rule, a contribution is taken to have been made when the funds are received by the superannuation provider.

Taxation Ruling TR 2010/1 states:

' 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, your statement for the Fund shows that the relevant contribution was received by the fund in the 2012-13 income year. Whilst you have provided a screenshot dated showing the balance in the relevant account on the date on which you conducted the transfer, this does not provide evidence that there was an increase in the account balance on that date. Furthermore, the bank's transaction processing policy in relation to bank accounts held in the same name denominated in the foreign currency specifies that any transfers conducted after the specified timeframe will be processed on the following business day. As you processed the transaction outside of the bank's processing timeframe, therefore, the transaction would be processed on the following business day as per the bank's processing policy.

Therefore the contribution is therefore taken to have been made during the 2012-13 income year as the capital of the fund increased on that date as per the bank statement.

Under subsection 292-85(2) of the Income Tax Assessment Act 1997 (ITAA 1997) non-concessional contributions made to a complying superannuation fund are subject to an indexed annual cap. For the 2011-12 and 2012-13 income years, the non-concessional contributions cap is $150,000.

Non-concessional contributions include (among others):

A taxpayer will have a liability to pay excess non-concessional contributions tax at the rate of 46.5% if they have excess non-concessional contributions for an income year (subsection 292-80 of the ITAA 1997 and sections 4 and 5 of the Superannuation (Excess Non-concessional Contributions Tax) Act 2007).

Under section 292-410 of the ITAA 1997, the taxpayer will be required to ask their superannuation fund to release an amount that is equal to the tax liability.

Therefore, any personal contributions that you make during the 2012-13 income year for which you do not claim an income tax deduction for will count towards your non-concessional contributions cap for that year.

Can the member make non-concessional contributions of up to $150,000 in the 2012-13 income year without triggering the 'bring-forward' provision under subsection 292-85(4) of the Income Tax Assessment Act 1997 (ITAA 1997)?

The bring-forward provisions

As a concession, to accommodate larger contributions, persons who are under age 65 at any time during an income year are able to 'bring forward' future entitlements equal to two years worth of non-concessional contributions. This means a person under age 65 in the 2011-12 and 2012-13 income years is able to contribute non-concessional contributions totalling $450,000 over three income years without exceeding their non-concessional contributions cap as per subsections 292-85(3) and (4) of the ITAA 1997.

The bring-forward will be triggered automatically when contributions in excess of the annual non-concessional contributions cap are made in an income year by a person, who is under age 65 at any time in the year, where a bring-forward has not already commenced (subsection 292-85(3) of the ITAA 1997).

Once a bring-forward has been triggered, the two future years' entitlements are not indexed.

Non-concessional contributions made in the 2012-13 income year

During the 2012-13 income year, you propose to make a non-concessional contribution. This will result in you exceeding the non-concessional contributions cap of $150,000 for that income year as the relevant contribution is taken to have been made in the 2012-13 income year.

As you will be under age 65 for the entire income year and the bring-forward under subsection 292-85(3) of the ITAA 1997 had not already commenced, this contribution will automatically trigger the bring-forward provisions.

Can the member make further non-concessional contributions of $450,000 in the 2013-14 income year by utilising the 'bring-forward' provision under subsection 202-85(4) of the ITAA 1997?

You propose to make a personal contribution totalling up to $450,000 (utilising the bring forward provisions) during the 2013-14 income year.

As noted earlier, your non-concessional contributions cap is $150,000 for the 2012-13 income year.

As you are currently under 65 years of age and have triggered the bring-forward provisions during the 2012-13 income year, you will be able to make non-concessional contributions of up to three times your non-concessional contributions cap of $150,000 over a three-year period. This means you can make personal contributions (for which you do not claim tax deduction for) for up to $450,000 between 1 July 2012 and 30 June 2015 without exceeding the non-concessional contributions cap.

In this case, the proposed contribution which you intend to make into your SMSF during the 2012-13 income year would trigger the bring forward provisions during that year. Therefore, you will not be able to make further non-concessional contributions of $450,000 in the 2013-14 income year by utilising the 'bring-forward' provision under subsection 202-85(4) of the ITAA 1997 without exceeding the non-concessional contributions cap.

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