Edited version of private ruling

Authorisation Number: 1011673333917

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Ruling

Subject: Deduction for Personal Superannuation Contribution

1. Can a 'notice of intent to deduct contributions' made for the 2009-10 income year be varied under section 290-180 of the Income Tax Assessment Act 1997 (ITAA 1997) to increase the amount of the deduction previously stated in relation to the personal contributions?

No.

2. Is your client entitled to claim a deduction in respect of his personal superannuation contributions for the 2009-10 income year under section 290-150 of the ITAA 1997?

No.

This ruling applies for the following period:

Year ended 30 June 2010.

The scheme commences on:

1 July 2009.

Relevant facts and circumstances

Your client, who is under age 65, has a superannuation account in a complying superannuation fund (the fund).

Your client made personal contributions into the fund during the 2009-10 income year. Your client lodged an application form in respect of these contributions.

The contributions were shown in the relevant section of application form, and these contributions were stated as being comprised of a personal concessional contribution and a personal non-concessional contribution.

Your client's cheque for the contributions was enclosed with the application form.

Your client's intention to claim a concessional contribution was supported by a statement of advice provided by your firm.

In the application form the fund advised that where a personal concessional contribution was being made, a 'Notice of Intent to claim a Tax Deduction' needed to be lodged with the fund in respect of the contribution. The fund also advised that:

· the notice could be lodged either at the time the contribution was made or after the end of the financial year, in respect of all personal contributions made during that year

· if the fund did not receive such a notice for the contribution, the fund would be required to the treat the contribution as a non-concessional contribution and the contribution would not be eligible for a tax deduction.

Your client completed a notice of intent to claim a tax deduction form, and signed and dated the form after the end of the 2009-10 income year. On this form your client stated an intent to claim a tax deduction of NIL in respect of the personal contributions that were covered by this notice.

In the application you advised that your client left this notice with your firm, clearly noting that your client did not want to claim a deduction as it was thought that claiming the tax deduction had already occurred as per the application form.

Your client gave the completed notice of intent (the notice) to your firm, for your firm to lodge with the fund on your client's behalf. Your firm then lodged the notice with the fund on your client's behalf. You lodged it with the Fund without checking it further, as you thought you were lodging a variation notice and not the original notice of intent.

Your client was later advised that a reduced deduction needed to be claimed. Shortly afterwards, your client lodged a notice of intent to claim or vary a deduction for personal superannuation contributions for the 2009-10 income year with the fund. In this notice your client stated:

· an intent to claim a tax deduction in respect of the personal contributions covered by the original section 290-170 notice, and

· this notice was varying down the earlier section 290-170 notice your client had lodged for these contributions.

After your client had lodged this variation notice, the fund trustee informed you that your client could not increase the amount being claimed as a tax deduction. You contacted the fund trustee and advised them that increasing the deduction was not intended. Rather, because you thought your client's intent to claim a tax deduction had already been notified in your client's account application, you advised them that your client was seeking to reduce the amount of the tax deduction being claimed.

Your client has yet to lodge an income tax return for the 2009-10 income year.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 290-150

Income Tax Assessment Act 1997 Section 290-170

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

Income Tax Assessment Act 1997 Section 290-180

Income Tax Assessment Act 1997 Subsection 290-180(1)

Income Tax Assessment Act 1997 Subsection 290-180(2).

Reasons for decision

Summary

Your client's original notice of intent to claim a deduction, covering the personal contributions made in the 2009-10 income year, was valid.

Your client cannot vary this valid notice to increase the amount of the tax deduction your client had previously stated in relation to these contributions.

The Commissioner does not have the discretion to allow the amount claimed as a tax deduction to be increased.

Detailed Reasoning

Personal superannuation contributions made in the 2009-10 income year

Where all the conditions in Subdivision 290-C of the ITAA 1997 are satisfied, a person can claim a deduction for personal contributions they make to a superannuation fund.

These conditions are explained in detail in Taxation Ruling TR 2010/1 'Income Tax: superannuation contributions' (TR 2010/1).

One of these conditions, in section 290-170 of the ITAA 1997, is that the member making a contribution must provide a valid notice of intent to claim a deduction (the notice) to their superannuation fund. The notice must be in the approved form and must have been given to the fund trustee by the required time. The member must also have been given an acknowledgment of receipt of the notice by the fund trustee.

As described in the facts, your client satisfied the notice of intent to deduct condition in section 290-170 of the ITAA 1997. However, your client satisfied this condition by lodging with the fund the notice of intent your client signed in early August 2010. This notice of intent was valid.

You state that your client believed that a valid section 290-170 notice was provided to the fund in the account application. However, the application form sent with the contribution clearly states that a 'Notice of Intent to claim a Tax Deduction' still needed to be lodged in respect of the contribution. Simply advising the fund on the application form was not sufficient.

Your client completed the relevant section of the application form, showing the contributions comprised a concessional contribution and a non-concessional contribution.

However, this section of the application form is explicitly stated by the fund not to constitute a valid notice of intent under section 290-170 of the ITAA 1997.

The application form was never intended by the fund to contain a section 290-170 notice and instructions concerning the lodgment of a separate notice for the purposes of section 290-170 of the ITAA 1997 were provided to your client.

Your client subsequently completed a notice of intent to claim a tax deduction form, and signed and dated the form. The notice covered the personal contributions your client made in the 2009-10 income year. On this form your client stated an intent to claim a tax deduction of NIL in respect of these contributions.

This completed notice of intent is a valid notice. It clearly states that it is a notice of intent for the purposes of section 290-170 of the ITAA 1997. The notice also has a dedicated signature block which was signed by your client.

Although you have stated that your client incorrectly completed the notice by showing the amount to be claimed as a deduction as NIL instead of the correct amount, this fact does not change the validity of the notice. Therefore, the notice is valid notwithstanding any error your client made in stating the amount of the deduction your client intended to claim.

In addition, the notice was lodged with the fund before your client lodged an income tax return for the 2009-10 income year.

As the notice your client signed is a valid notice of intent, the trustee of the fund is entitled to rely on this notice, and issue to your client an acknowledgment of receipt of the notice in accordance with subsection 290-170(1) of the ITAA 1997.

In this case, the notice your client signed was the valid notice of intent your client provided to the fund for the 2009-10 income year. Hence, this notice is the original section 290-170 notice your client sought to vary with a subsequent variation notice.

Variation of a notice of intent to deduct conditions

In accordance with subsection 290-180(1) of the ITAA 1997 a person cannot revoke or withdraw a valid notice of intent in relation to a personal contribution.

However, a valid notice can be varied under section 290-180 of the ITAA 1997 subject to a number of restrictions as follows:

290-180(2) You can vary a valid notice, but only so as to reduce the amount stated in relation to the contribution (including to nil). You do so by giving notice to the trustee or the RSA provider in the approved form.

290-180(3) However, you cannot vary a valid notice after:

(a) if you have lodged your income tax return for the income year in which the contribution was made on a day before the end of the next income year - the end of that day; or

(b) otherwise - the end of the next income year.

290-180(3A) The variation is not effective if, when you make it:

(a) you were not a member of the fund or the holder of the RSA; or

(b) the trustee or RSA provider no longer holds the contribution; or

(c) the trustee or RSA provider has begun to pay a superannuation income stream based in whole or part on the contribution.

Relevant to this case is the restriction in subsection 290-180(2) concerning the amount of the deduction previously stated for the contribution which can be varied.

The requirements of subsection 290-180(2) of the ITAA 1997 are not satisfied

As noted above, where a person gives a valid notice of intent to their fund trustee, subsection 290-180(2) of the ITAA 1997 provides that they can vary a valid notice only to reduce the amount of the deduction previously stated in the notice (including to NIL). Accordingly subsection 290-180(2) precludes a person from varying a valid notice to increase the amount of the deduction previously stated in relation to their personal contributions, where the amount stated in the original notice was NIL.

Consequently, the original notice of intent your client signed cannot be varied.

This is because subsection 290-180(2) of the ITAA 1997 precludes your client from varying this valid section 290-170 notice, to increase the amount of the deduction shown on this notice.

Therefore, the notice your client purported to give to the fund trustee to vary the valid original notice is not effective and the fund trustee cannot accept it.

Your client's valid section 290-170 notice cannot be varied

In view of all the above, your client does not satisfy the requirements prescribed in section 290-180 of the ITAA 1997. Hence, your client cannot vary the valid section 290-170 notice covering the personal contributions your client made during the 2009-10 income year.

Further, the Commissioner has no discretion to allow the amount claimed as a tax deduction to be increased.

Unfortunately, Subdivision 290C of the ITAA 1997 does not give the Commissioner the power to exercise a discretion to allow a deduction where any of the requirements of this provision have not been satisfied, regardless of the reasons those requirements were not met, or the extent to which those reasons were within or beyond a taxpayer's control.

As a result, the Commissioner cannot accede to your request to disregard your client's original notice of intent.

Conclusion

As your client gave a valid notice to the fund stating that a deduction was being claimed for no part of the personal contributions your client made during the 2009-10 income year, no part of these contributions is deductible under section 290-150 of the ITAA 1997.