Edited version of your written advice

Authorisation Number: 1012991195276

Date of advice: 30 March 2016

Ruling

Subject: Deductibility of personal superannuation contributions.

Question

Can a person (the Taxpayer) deduct personal superannuation contributions made to a superannuation fund under section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes

This ruling applies for the following period:

Income year ending 30 June 2016

The scheme commences on:

1 July 2015.

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

The Taxpayer is under the age of 75.

The Taxpayer is a member of a State Government APRA Regulated Public Sector Scheme (the Fund) which is exempt from regulation.

The Taxpayer proposes to make a personal superannuation contribution to the Fund in the 2015-16 income year.

The Taxpayer has been employed during the 2015-16 income year however, they will satisfy the maximum earnings as employee condition under section 290-160 of the ITAA 1997.

The Taxpayer will provide a written notice to the trustee of the Fund stating their intention to claim a deduction for personal superannuation contributions made in the relevant income year.

The Taxpayer will ensure that they receive written notice from the trustee of the Fund acknowledging receipt of the notice.

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

Superannuation Guarantee (Administration) Act 1992

Superannuation Industry (Supervision) Act 1993 Section 45

Superannuation Industry (Supervision) Act 1993 Subsection 45(6)

Reasons for decision

Summary

The Taxpayer can deduct the personal superannuation contribution made to the Fund in the 2015-16 income year.

Detailed reasoning

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 ITAA 1997. However, the conditions in sections 290-155, 290-160 (if applicable), 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 you made the contribution.

In accordance with section 995-1(1) of the ITAA 1997, 'complying superannuation fund' means a complying superannuation fund within the meaning of section 45 of the Superannuation Industry (Supervision) Act 1993 (SISA).

Relevantly, subsection 45(6) of the SISA provides that if, at all times during the year of income, a fund was, or was part of, an exempt public sector superannuation scheme, the fund is a complying superannuation fund for the purposes of the Income Tax Assessment Act.

Based on the above, the Fund, being an exempt public sector superannuation scheme, is a complying superannuation fund for the purposes of section 290-155 of the ITAA 1997.

Maximum earnings test

According to subsection 290-160(1) of the ITAA 1997, the maximum earnings as employee condition only 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 duties;

(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 had not been enacted).

You have indicated that the Taxpayer has engaged in activities in the 2015-16 income year that would make them an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992.

Accordingly, the Taxpayer will be subject to the maximum earnings as employee condition under section 290-160 of the ITAA 1997 in the 2015-16 income year.

Subsection 290-160(2) of the ITAA 1997 states:

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 year;

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

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

*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1

You have stated that in the 2015-16 income year less than 10% of the total of the above amounts will be attributable to the Taxpayer's employment activities defined in subsection 290-160(1) of the ITAA 1997. If that is the case, this condition in section 290-160 of the ITAA 1997 will 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.

As the Taxpayer will be under 75 years of age at all times in relation to the relevant income year, this condition is satisfied.

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 relevant 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:

• the person is a member of the fund; or

• the trustee of the fund 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); or

• the trustee of the fund has not begun to pay a superannuation income stream based on the contribution;

• before the notice is given:

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

• the trustee of the fund has not rejected the application.

In this case, the Taxpayer intends to provide a written notice to the Fund stating their intention to claim a deduction for the relevant contribution, and expects to obtain a written notice from the trustee of the Fund acknowledging this.

Once the Taxpayer has undertaken this action, the conditions in section 290-170 of the ITAA 1997 will be satisfied.

Deduction limits

The allowable deduction is limited under subsection 26-55(2) of the ITAA 1997 to the amount of assessable income remaining after subtracting all other deductions (excluding previous year's tax losses and any deductions for farm management losses) from a taxpayer's assessable income.

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).