Edited version of private ruling

Authorisation Number: 1011669806627

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Ruling

Subject: Concessional contributions cap

Questions and answers

Will salary sacrifice contributions that relate to the 2009-10 income year but not received by the superannuation fund until the 2010-11 income year count towards the concessional contributions cap for the 2010-11 income year?

Yes

Do salary sacrifice contributions made to a constitutionally protected fund (CPF) count towards the contributions cap?

No.

This ruling applies for the following period:

2009-10 income year

2010-11 income year

The scheme commences on:

1 July 2009

Relevant facts and circumstances

You are a member of a superannuation fund (the Fund).

The Fund is a constitutionally protected fund.

You joined the Fund several years ago.

You are currently salary sacrificing an amount of contributions per fortnight into the Fund.

You recently set up a self managed superannuation fund (SMSF) and an amount was transferred into the SMSF from another superannuation fund (Fund B). You are currently salary sacrificing an amount a fortnight into Fund B.

In 2009-10 you salary sacrificed into Fund B via a salary packaging company and to Fund A direct from your payroll.

You provided details of the salary sacrificed amounts contributed to Fund B by your employer via a salary packaging company during the 2009-10 income year.

You also provided details of the salary sacrificed amounts contributed to Fund B by your employer via a salary packaging company during the 2010-11 income year.

You advised that a salary packaging company held on to a amount that was contributed in the 2009-10 income year but sent that amount to Fund B in the 2010-11 income year.

You are under 55 years of age.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 292-20

Income Tax Assessment Act 1997 section 292-25

Income Tax Assessment Act 1997 subsection 292-25(1)

Income Tax Assessment Act 1997 subsection 292-25(2)

Income Tax Assessment Act 1997 subsection 292-25(3)

Income Tax Assessment Act 1997 subparagraph 292-25(2)(c)(iii)

Income Tax Assessment Act 1997 subsection 295-190(1)

Income Tax (Transitional Provisions) Act 1997 Section 292-20

Income Tax Assessment Regulations 1997 Regulation 292-25.01

Income Tax Regulations1997 Subregulation 292-25.01(3)(c)

Reasons for decision

Summary

Salary sacrifice contributions that relate to the 2009-10 income year but not received by the superannuation fund until the 2010-11 income year will count towards the concessional contributions cap for the 2010-11 income year.

Salary sacrifice contributions made to a constitutionally protected fund (CPF) do not count towards the contributions cap.

Detailed reasoning

Concessional contributions

Under section 292-20 of the Income Tax Assessment Act 1997 (ITAA 1997) you have excess concessional contributions for a financial year if the amount of your concessional contributions for the year exceeds your concessional contributions cap for the year.

Under subsection 292-25(1) of the ITAA 1997 the amount of your concessional contributions for a financial year is the sum of each contribution covered under subsection 292-25(2) of the ITAA 1997 and each amount covered under subsection 292-25(3) of the ITAA 1997.

A contribution covered under subsection 292-25(2) of the ITAA 1997 is a contribution that:

· is made in the financial year to a complying superannuation plan in respect of you, and

· is included in the assessable income of the superannuation provider in relation to the plan.

Employer contributions made under a salary sacrifice arrangement are included as concessional contributions under subsection 292-25(2) of the ITAA 1997

From the facts of the case, during the 2009-10 income year you salary sacrificed superannuation contributions into Fund B via a salary packaging company and to Fund A direct from your payroll. You provided a copy of the Fund B statement (the statement) for contributions made during the 2009-10 income year. The statement confirmed that contributions were made for you to Fund B by your employer. Your employer made contributions for you to Fund B approximately every fortnight. The last contribution made by your employer to Fund B for you during the 2009-10 income year was in the 2009-10 income year.

You advised that a salary packaging company held on to a amount that was paid by your employer in the 2009-10 income year but that amount was sent to Fund B in the 2010-11 year.

Under subsection 292-25 of the ITAA 1997 the amount of your concessional contributions for a financial year includes a contribution made for you in the financial year to a complying superannuation fund. The contribution would be counted in the concessional contributions cap in financial year that it is made.

It should be noted that the Commissioner can only disregard contributions or reallocate them to another financial year if you have received an excess contributions tax (ECT) assessment and there are special circumstances. If you disagree with how we calculated the total contributions for your ECT assessment, you may object to the assessment or request a amendment. Enclosed, for your information in this regard, is a copy of our publication 'Excess contributions tax-applying to have your contributions disregarded or reallocated'.

Contributions made to a constitutionally protected fund

As mentioned above, under subsection 292-25(1) of the ITAA 1997 the amount of your concessional contributions for a financial year is the sum of each contribution covered under subsection 292-25(2) of the ITAA 1997 and each amount covered under subsection 292-25(3) of the ITAA 1997.

However, under subparagraph 292-25(2)(c)(iii) of the ITAA 1997, a contribution covered under section 292-25 of the ITAA 1997 does not include a contribution made to a constitutionally protected fund (CPF).

In addition, subsection 292-25(3) of the ITAA 1997 includes a contribution that is an amount in a complying superannuation plan if it is allocated by the superannuation provider in relation to the plan for you for the year in accordance with conditions specified in the regulations.

Regulation 292-25.01 of the Income Tax Assessment Regulations 1997 (ITAR 1997) sets out conditions for the purposes of allocating an amount in a complying superannuation plan. Subregulation 292-25.01(3)(c) of ITAR 1997 states that a contribution made to a constitutionally protected fund is to be treated as not having been allocated by the superannuation provider in a way that is covered by subsection 292-25(3) of the ITAA 1997.

It is accepted that Fund A is a CPF.

In your case, your employer makes superannuation contributions to Fund A, a CPF, on your behalf. Contributions made to a CPF do not form part of concessional contributions for the purposes of section 292-20 of the ITAA 1997.

Concessional contributions cap

Your concessional contributions cap for the financial year ended 30 June 2011 or later financial year is the amount worked out by indexing annually the amount mentioned in paragraph 292-20(2)(c) of the ITAA 1997, which is $25,000.

If you have excess concessional contributions for a financial year between 1 July 2007 and before 1 July 2012 and you are 50 years or over on the last day of that financial year, your transitional concessional contributions cap for each financial year up to 30 June 2012 is $50,000. The transitional concessional contributions cap is not indexed (see section 292-20 of the Income Tax (Transitional Provisions) Act 1997).

As you would be over 50 on the last day of each of the financial years ended 30 June 2010 to 2012, as such, you have access to the transitional concessional contributions cap of $50,000 for each of those financial years.

For the financial year ended 30 June 2013 your concessional contributions cap will be $25,000 (see section 292-20 of the ITAA 1997), and will not include the contributions that your employer makes for you under the salary sacrifice arrangement to Fund A, as explained above.