Edited version of private ruling

Authorisation Number: 1011648844690

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Ruling

Subject: Deduction for personal superannuation contribution

Issue

Question

Can your client claim a tax deduction for personal superannuation contributions in the 2010-11 income year under section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes

This ruling applies for the following periods:

2010-11 income year

The scheme commences on:

1 July 2010

Relevant facts and circumstances

Your client is a member of a superannuation fund (the fund).

The fund is a constitutionally protected superannuation fund.

The fund is a complying superannuation fund.

Your client intends to make a contribution to the fund.

Your client is not currently employed in any capacity and has not been during the 2010-11 income year.

Your client is currently self employed and it is anticipated that your client's gross business income for the 2010-11 income year will be approximately an amount.

You have advised that during the 2010-11 income year, it is not expected that superannuation support will be made on your client's behalf by any party. It is also not expected that your client would hold an office or perform any work or the activities that would result in your client being treated as an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992 (SGAA 1992). If any such work or other activities are performed, it is not expected that the 10% limit would be exceeded.

Your client is under 75 years of age.

Assumptions

The taxpayer will satisfy the maximum earnings as an employee condition under section 290-160 of the ITAA 1997 in each of the relevant income years.

The taxpayer will provide a written notice to the trustee of the fund under section 290-170 of the ITAA 1997, stating that the taxpayer intends to claim a deduction for personal contributions made in each of the relevant income years.

The trustee of the fund to which the contributions were made will provide a written notice under section 290-170 of the ITAA 1997 acknowledging receipt of the notice.

The deduction for personal superannuation contributions will not add to or create a loss for the taxpayer.

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 290-155

Income Tax Assessment Act 1997 Section 290-160

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

Income Tax Assessment Act 1997 Subsection 290-170(1)

Income Tax Assessment Act 1997 Subsection 290-170(2)

Income Tax Assessment Act 1997 Subsection 290-170(3)

Income Tax Assessment Act 1997 Subsection 290-170(4)

Reasons for decision

Issue

Summary

Your client can claim a tax deduction for personal superannuation contributions in the 2010-11 income year under section 290-150 of ITAA 1997.

Detailed reasoning

Deductions for personal superannuation contributions

A person must satisfy the conditions in section 290-150 of the 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.

However, subsection 290-150(2) of the ITAA 1997 provides that the conditions in sections 290-155, 290-160, 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.

Complying superannuation fund condition:

Section 290-155 of the ITAA 1997 states that:

If the contribution is made to a superannuation fund, it must be a complying superannuation fund for the income year of the fund in which you made the contribution.

In this case, you have advised that your client will make personal superannuation contributions to the fund. The fund is a complying superannuation fund. Therefore this requirement 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 your client will be under age 75 when the proposed contributions are to be made, they satisfy this requirement.

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 your client 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, your client 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:

· 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:

- your client 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.

As noted above, it is assumed that your client will provide a valid notice to the trustee of their superannuation fund stating their intention to claim tax deductions in respect of the personal contributions made in the 2010-11 income year, and that the trustee of your client's superannuation fund will acknowledge that notice. Consequently, section 290-170 of the ITAA 1997 will be satisfied.

Maximum earnings as an employee condition:

Section 290-160 of the ITAA 1997 requires that if, in the income year in which the contribution is made, a person is engaged in any of the following activities:

· holding an office or appointment (for example, a director of a company)

· performing functions or duties

· engaging in work

· doing acts or things and

the activities result in that person being treated as an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992 (SGAA 1992) assuming that subsection 12(11) of the SGAA 1992 had not been enacted, then the total of that persons assessable income and reportable fringe benefits attributable to the activities must be less than 10% of their total assessable income and reportable fringe benefits for the income year.

You have advised that during the 2010-11 income year that it is not expected that superannuation support will be made on your client's behalf by any party. It is also not expected that your client would hold an office or perform any work or the activities that would result in your client being treated as an employee for the purposes of the SGAA 1992. If any such work or other activities are performed, it is not expected that the 10% limit would be exceeded.

Consequently, the condition under section 290-160 of the ITAA 1997 will be satisfied.

As your client has satisfied all the conditions in sections 290-155, 290-160, 290-165 and 290-170 of the ITAA 1997 in the 2010-11 income year, they may claim a deduction for the contributions made in that income year.