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Ruling

Subject: Subject: Deduction for Personal Superannuation Contribution

Question:

Can you claim a deduction for a personal superannuation contribution made in the 2009-10 income year under section 290-150 of the Income Tax Assessment Act 1997?

Answer:

No.

This ruling applies for the following period:

Year ended 30 June 2010.

The scheme commences on:

1 July 2009.

Relevant facts and circumstances:

You are over age 55 but under age 65, and have a superannuation account with a complying superannuation fund (the fund).

You made a personal contribution into your superannuation account with the fund, and your contribution was received by the Fund in late April 2010.

You are a partner with your spouse in a partnership. In the 2009-10 income year the partnership received income from rents and interest. A share of the net income of the partnership was distributed to you.

In early May 2011 your income tax return for the 2009-10 income year was lodged with the Australian Taxation Office (ATO). Your partnership distribution was the only income you disclosed in your return for this income year. You also claimed a deduction for your personal superannuation contribution in your return. An income tax assessment for the 2009-10 income year was issued to you several days later, and the deduction was allowed in this assessment.

You state that the fund incorrectly processed your contribution as an employer contribution rather than as a member voluntary contribution. In July 2011 you contacted the fund about the processing of your contribution.

In letters sent to you during the next month, the fund advised you that your superannuation account had been adjusted to show your contribution as a member voluntary contribution, and the contributions tax had been refunded.

Several days after you had received one of these letters from the fund, you lodged a personal tax deduction notice for the 2009-10 income year (the notice) with the fund. In the notice you stated your intention to claim the full amount of your personal contribution as a tax deduction for the 2009-10 financial year.

In a letter sent to you in late November 2011, the fund advised you that the notice is not valid as it was lodged after the end of the income year following the financial year stated in the notice.

Relevant legislative provisions:

Income Tax Assessment Act 1997 Section 290-150,

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 Section 290-170,

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

Income Tax Assessment Act 1997 Paragraph 290-170(1)(a),

Income Tax Assessment Act 1997 Paragraph 290-170(1)(b) and,

Income Tax Assessment Act 1997 Paragraph 290-170(1)(c).

Reasons for decision

Summary

A person can claim a deduction in respect of personal superannuation contributions made to a complying superannuation fund provided all the requirements of the legislation are met. One of those requirements is the lodgment of a notice of intent to claim a deduction in respect of personal superannuation contributions (the notice).

The notice must be lodged with the trustee of the relevant superannuation fund by no later than:

(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.

The Commissioner of Taxation does not have the discretion to allow an extension of this time in which to lodge the notice.

In this case, the notice of intent should have been given to the trustee of the fund before your tax return for the 2009-10 income year was lodged.

Therefore you are not entitled to claim a deduction in respect of your personal contributions for this income year.

The Commissioner also does not have the discretion to allow a deduction for your personal contribution and to treat your contribution as a concessional contribution.

Detailed reasoning

Deductions for personal superannuation contributions

A person must satisfy the conditions in section 290-150 of the Income Tax Assessment Act 1997 (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.

Further, subsection 290-150(2) of the ITAA 1997 provides that the conditions in sections 290-155, 290-160 (if applicable), 290-165 and 290-170 must all be satisfied before the person can claim a deduction for the contributions made in that income year. These conditions are explained in detail in Taxation Ruling TR 2010/1 (TR 2010/1) entitled 'Income Tax: superannuation contributions'.

Notice of intent to deduct conditions

Subsection 290-170(1) of the ITAA 1997 provides that for a person to be eligible for a deduction for a personal superannuation contribution, the person must give a valid notice of their intention to claim the deduction to the trustee of their superannuation fund (the fund trustee), and must receive an acknowledgment of receipt of the notice.

Paragraph 290-170(1)(b) of the ITAA 1997 states:

the notice must be given before:

(i) 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

(ii) otherwise - the end of the next income year; …

In relation to the requirements of subsection 290-170(1) of the ITAA 1997, the Commissioner notes in paragraph 263 of TR 2010/1 that:

A person who intends to deduct their personal superannuation contributions must give to their superannuation provider a valid notice in the approved form before lodging their income tax return for the year (or within 12 months of the end of the income year if they have not lodged their return by that time). The trustee must also acknowledge receipt of the notice. [emphasis added]

Notice requirements not satisfied

You made a personal contribution into your superannuation account with the fund during the 2009-10 income year.

Your contribution was received by the Fund in late April 2010, and the fund processed your contribution as an employer contribution rather than as a member voluntary contribution.

Your income tax return for this income year was lodged In early May 2011. As your tax return has been lodged, the required time by which a valid notice of intent to claim a deduction must be lodged is the lodgement date of your return.

An income tax assessment for this income year was issued to you several days later.

In July 2011 you contacted the Fund about the processing of your contribution. In a letter sent to you in mid August 2011, the fund advised you that your superannuation account had been adjusted to show your contribution as a member voluntary contribution, and the contributions tax had been refunded.

Several days after you had received the letter from the fund, you lodged a personal tax deduction notice for the 2009-10 income year (the notice) with the fund. In the notice you stated your intention to claim the full amount of your contribution as a tax deduction for this financial year.

A number of days later you received another letter from the fund, which reiterated the advice that was provided in their previous letter.

You state that the Fund has advised you that it is too late for them to process the notice. In this respect, the fund advised in a letter sent to you in late November 2011, that the notice is not valid as it was lodged after the end of the income year following the financial year stated in the notice.

In this case, the facts show that you did not provide the fund trustee with a valid notice of intent in respect of your contribution before each of the following dates:

§ the lodgement date of your income tax return for the 2009-10 income year;

§ the date on which your income tax assessment for this income year was issued; and

§ the end of the following income year (i.e. the 2010-11 income year).

Therefore, the requirement under paragraph 290-170(1)(b) of the ITAA 1997 has not been satisfied. Consequently, it is too late for the fund trustee to accept your notice.

As a result, the fund trustee cannot treat your contribution as a concessional contribution. This means the fund trustee cannot amend the fund's income tax return to include your contribution as income. Further, the fund trustee cannot amend your superannuation account to deduct income tax in relation to your contribution.

A deduction is not allowable for your contribution

You claimed a deduction for your personal contribution in your income tax return for the 2009-10 income year. This deduction was wholly allowed in your assessment for this income year.

As noted above, 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. In this instance, the requirements of section 290-170 were not satisfied.

Therefore, you are not entitled to claim a deduction in respect of the personal contribution you made during this income year.

Discretion

There is no provision in section 290-170 of the ITAA 1997 which extends the time limit specified in paragraph 290-170(1)(b) for lodging these notices. Similarly, neither section 290-170 or any other provision of the ITAA 1997 gives the Commissioner the power to exercise a discretion to grant an extension of time for a person to lodge a valid notice under section 290-170.

Further, section 290-170 does not give the Commissioner the power to exercise a discretion to allow a deduction for your contribution and treat your contribution as a concessional contribution, where any of the requirements of this provision have not been satisfied. This is 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 have your personal contribution treated as a concessional contribution, and to arrange for the payment of income tax in relation to your contribution.

Conclusion

As the notice of intent to deduct conditions have not been satisfied, the personal contributions you made during the 2009-10 income year are not deductible under section 290-150 of the ITAA 1997.