Edited version of private ruling

Authorisation Number: 1011797091632

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Ruling

Subject: deduction for personal superannuation contribution

Questions

Will the personal superannuation contributions be deductible under section 290-150 of the Income Tax Assessment Act 1997 in the 2009-10 income year?

Answers

No.

This ruling applies for the following period

2009-10 income year.

The scheme commenced on

1 July 2009

Relevant facts

You are a member of the Fund, a complying superannuation fund.

At the end of the 2009-10 income year, you made an over-the-counter lump sum deposit at a branch of the Bank, intended as a contribution to the Fund.

The lump sum was credited to your superannuation account with the Fund at the beginning of the 2010-11 income year, as indicated by your account statement.

The Fund's Product Disclosure Statement confirms that over-the-counter deposits at a bank branch are not a service offered by the Fund.

Reasons for decision

Summary

The lump sum deposit made to the Fund was not received by the Fund until the beginning of the 2010-11 income year. Accordingly, the contribution was made in the 2010-11 income year.

Therefore, the contribution will not be deductible for the 2009-10 income year.

Detailed reasoning

Personal deductible superannuation contributions

From 1 July 2007, subsection 290-150(1) of the Income Tax Assessment Act 1997 (ITAA 1997), allows a person to claim a deduction in respect of personal contributions made to a superannuation fund or retirement savings account (RSA) during an income year for the purpose of providing superannuation benefits for themselves, or their dependants after their death.

You made an over-the-counter lump sum deposit at the end of the 2009-10 income year at the Bank. This lump sum was intended as a personal superannuation contribution to the Fund in order to obtain superannuation benefits.

However, subsection 290-150(3) of the ITAA 1997 provides that:

You can deduct the contribution only for the income year in which you made the contribution.

Taxation Ruling TR 2010/1, titled 'Income tax: superannuation contributions', sets out the Commissioner's view on contributions made to a superannuation fund, an approved deposit fund or a retirement savings account.

Item 1 of paragraph 13 of TR 2010/1 states that if funds are transferred by making a cash payment to the superannuation provider, then the contribution is made when the cash is received by the superannuation provider.

In relation to the transfer of funds TR 2010/1 states at paragraph 182:

A superannuation contribution is made when the capital of the fund is increased. …

In relation to when a superannuation contribution is made in relation to cash or electronic funds transfer, TR 2010/1 goes on to state at paragraphs 183 to 187:

183. A contribution of funds as cash or as an electronic funds transfer, is made when the amount is received by the superannuation provider or credited to the relevant account.

184. It has been suggested that a contribution made by electronic funds transfer may occur as soon as the contributor has done everything necessary to effect a payment. The Commissioner does not accept that is sufficient to increase the capital of the fund.

185. Electronic payment systems operate through contractual arrangements between the:

· payer and payer's financial institution;

· payer's financial institution and payee's financial institution; and

· payee's financial institution and payee.

186. When a financial institution agrees to accept a payment instruction it notifies the receiving institution of the details of the payment. In Australia there are several different clearing systems for the transferring of information and netting of amounts to be transferred between institutions. The clearing rules of these systems bind the financial institutions but not the customers. Most small payments between institutions are not processed in real time but are subject to deferred net settlement which occurs overnight. As such, it is not until an amount is credited to a bank account of the superannuation provider that a contribution will be taken to be made.

187. A superannuation provider's account statement would normally provide the best evidence as to when a contribution is received.

From the above, it can be said that a fund member is only taken to have made a contribution to their superannuation fund when the superannuation fund receives it.

In this case your over-the-counter deposit was made to the Fund as a superannuation contribution at the end of the 2009-10 income year at the Bank and was not credited to the Fund until the beginning of the 2010-11 income year. Therefore, the contribution was not made in the 2009-10 income year.

Consequently, the contribution will not be deductible for the 2009-10 income year.

As the contribution was made in the 2010-11 income year, it will be deductible for the 2010-11 income year if the relevant conditions are met.