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Ruling
Subject: Deduction for losses incurred by retail superannuation fund
Question
Can you claim a deduction for losses incurred by a superannuation fund, of which you were a member, that reduced your investment in the fund?
Advice/Answers
No.
This ruling applies for the following period
Year ending 30 June 2009
The scheme commenced on
1 July 2008
Relevant facts
You are a member of a superannuation fund (the Fund).
You requested the Fund to pay you an amount in the 2008-09 income year.
You state that you wish to:
· claim back a net loss as shown on an annual statement for the 2007-08 income year from the Fund.
· claim back the negative gross earnings as shown in a statement from the Fund received in the 2008-09 income year.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Income Tax Assessment Act 1997 Subsection 8-1(1)
Income Tax Assessment Act 1997 Section 8-5
Reasons for decision
Summary of decision
You cannot claim a deduction for losses incurred by the superannuation fund (the Fund), of which you were a member, that reduced your investment in the Fund.
Detailed reasoning
Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) sets out when a person may claim a deduction. Subsection 8-1(1) of the ITAA 1997 states:
You can deduct from your assessable income any loss or outgoing to the extent that:
(a) it is incurred in gaining or producing your assessable income; or
(b) it is necessarily incurred in carrying on a *business for the purpose of gaining or producing your assessable income.
Further, section 8-5 of the ITAA 1997 states:
(1) You can also deduct from your assessable income an amount that a provision of this Act (outside this Division) allows you to deduct.
(2) Some provisions of this Act prevent you from deducting an amount that you could otherwise deduct, or limit the amount you can deduct.
(3) An amount that you can deduct under a provision of this Act (outside this Division) is called a specific deduction.
Under section 8-1 of the ITAA 1997 a loss or outgoing will not be deductible if it is incurred in gaining or producing the assessable income of a person other than the one who incurs it ( FC of T v. Munro (1926) 38 CLR 153).
In order for a deduction to be allowable, there must be a nexus between the incurring of the outgoing and the assessable income being derived.
You state that you wish to:
· claim back a net loss as shown on an annual statement for the 2007-08 income year from the Fund.
· claim back the negative gross earnings as shown in a statement from the Fund received in the 2008-09 income year.
In this case you have not incurred the losses you wish to claim in gaining or producing your assessable income you are not entitled to the deduction. The losses are incurred by the Fund. Accordingly it is only the trustee of the Fund that can claim the losses. Any losses incurred by the Fund will, depending on the type of loss, may be able to be recouped by the Fund against any future capital gain. In addition, no other provision allows you to claim the deduction.