1051208061308 | Legal database

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Edited version of your written advice

Authorisation Number: 1051208061308

Date of Advice: 28 March 2017

Ruling

Subject: Deductibility of personal superannuation contributions

Question

Can the Taxpayer deduct $35,000 personal superannuation contributions made to the Fund under section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

This ruling applies for the following period:

Income year ended 30 June 2016

The scheme commences on:

1 July 2015

Relevant facts and circumstances

The Taxpayer is over age 60.

The Taxpayer is a member of a complying superannuation fund (the Fund).

The Taxpayer made a personal superannuation contribution of $35,000 to the Fund in the 2015-16 income year.

The Taxpayer ceased employment with the Employer in the 2014-15 income year.

The Taxpayer subsequently received a payment for long service leave and holiday pay which was received in the 2015-16 income year.

The Taxpayer worked again for the Employer for a week during the 2015-16 income year and received salary and an employer superannuation guarantee contribution.

During the 2015-16 income year, the Taxpayer's assessable income consisted of:

Long service leave and holiday pay entitlements

Salary

Partnership income

Interest income

Dividends

Capital gains

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 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

Reasons for decision

Summary

The Taxpayer was 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.

The Taxpayer does not satisfy the maximum earnings as employee condition under section 290-160 of the ITAA 1997 as more than 10% of their assessable income for the year was attributable to employment activities.

In view of the above, the Taxpayer cannot deduct their personal superannuation contributions 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 the Taxpayer made the contribution.

This condition is satisfied as in the 2015-16 income year the Taxpayer made a contribution to a complying superannuation fund.

Maximum earnings as employee condition

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).

As the Taxpayer was engaged in employment activities during the 2015-16 income year, the maximum earnings as employee condition under section 290-160 of the ITAA 1997 will apply.

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;

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

In this case, the Taxpayer initially ceased employment with the Employer in the 2014-15 income year.

The Taxpayer received a payment for their long service leave and holiday pay entitlements in the 2015-16 income year.

It is recognised that the payment received in the 2015-16 income year was with respect to entitlements accrued prior to 30 June 2015. The Taxpayer engaged in employment activities with the Employer again in the 2015-16 income year.

On the basis of the information provided, more than 10% of the total of the amounts in subsection 290-160(2) of the ITAA 1997 will be attributable to the Taxpayer's employment activities.

As this condition has not been satisfied, it is not necessary to consider any further conditions in the subsequent sections.

ATO view documents

Taxation Ruling TR 2010/1 Income tax: superannuation contributions

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