Edited version of private ruling

Authorisation Number: 1011498932469

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Ruling

Subject: Deduction for Personal Superannuation Contribution

Is your client entitled to claim a deduction for personal superannuation contributions made in the 2008-09 income year under section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997)?

No.

This ruling applies for the following period:

Year ending 30 June 2009.

The scheme commences on:

1 July 2008.

Relevant facts and circumstances

Your client made a personal superannuation contribution (PSC) to their Retirement Savings Account (the RSA).

A superannuation income stream that is based in part on the PSC commenced after the contribution was made to the RSA.

A notice of intent to claim a deduction for superannuation contributions (the notice) was lodged with the RSA provider after the income stream commenced.

The notice was rejected by the RSA provider.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 290-150.

Income Tax Assessment Act 1997 Subsection 290-150(1).

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(2).

Reasons for decision

Summary

Your client is not entitled to a deduction for his personal superannuation contribution made in the 2008-09 income year, as they have not provided a valid notice of intent to claim a deduction for his contributions to his RSA. Your client has also not received an acknowledgment of a valid notice from his RSA provider.

Detailed reasoning

Personal deductible superannuation contributions:

From 1 July 2007, a person can claim a deduction for PSC made to a RSA for the purpose of providing superannuation benefits for themselves under section 290-150 of the ITAA 1997.

However, all the conditions specified 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. The condition in section 290-170 of the ITAA 1997 is that a valid notice of intent to claim a deduction for superannuation contributions must be given to and acknowledged by the RSA provider within the required timeframe.

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 their RSA provider. 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 RSA provider.

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:

o the person is a holder of the RSA

o the 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)

o the RSA provider has not begun to pay a superannuation income stream based on the contribution, or

· before the notice is given:

o a contributions splitting application has not been made in relation to the contribution, and

o the RSA provider has not rejected the application.

Paragraph 272 of Taxation Ruling TR 2010/1 Income tax: superannuation contributions (TR 2010/1) provides 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.

Your client made a PSC to his RSA. This was then rolled over to an RSA allocation pension account on the date the superannuation income stream commenced. They subsequently lodged a notice of intention to claim a deduction on the PSC, however, it was rejected by the RSA provider. As the income stream was paid out of the PSC made to his RSA, it is the Commissioner's view that the income stream is based 'in whole or in part on' the PSC in question.

In addition, section 290-170 of the ITAA 1997 sets out conditions in regards to the validity of a notice of intent. In particular, a notice of intention to claim a deduction will be valid if the RSA provider has not begun to pay a superannuation income stream based on the contribution at the time the notice is lodged. In your client's case, the notice was lodged after the income stream commenced. Therefore, the notice of intent would be deemed invalid under such provision.

Consequently, your client has not satisfied the condition under section 290-170 of the ITAA 1997 in relation to lodging a valid notice to the RSA provider.

Commissioner's discretion

It should be noted that the Commissioner has no discretion to disregard the operation of section 290-170 of the ITAA 1997, as there is no allowance made for such discretion within the income tax legislation governing deductions for PSC. The Commissioner can only exercise, or refuse to exercise, a discretion when he is given that discretion in the legislation he administers.

Conclusion

As your client has not met all applicable conditions in accordance with section 290-150 of the ITAA 1997, they are not eligible to claim a deduction for his PSC for the 2008-09 income year.