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Edited version of your private ruling
Authorisation Number: 1012108236671
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Ruling
Subject: deduction for overseas superannuation fees
Questions
Are you assessable on the gross amount of employment income received from a foreign country?
Answer: Yes
Are you entitled to a deduction for contributions to the foreign country's superannuation fund?
Answer: No
This ruling applies for the following period
Year ended 30 June 2008
Year ended 30 June 2009
Year ended 30 June 2010
Year ended 30 June 2011
The scheme commenced on
1 July 2007
Relevant facts and circumstances
You immigrated to Australia on a temporary visa.
You are now a resident of Australia for taxation purposes.
You earn employment and property income in a foreign country which is taxed in that foreign country.
You are aware that as an Australian resident your employment income will be taxed in Australia and that a foreign tax credit will be allowed for the relevant amount of tax paid on that income.
You pay into a superannuation fund in the overseas country.
The fund is similar to the UK national pension and Australian Superannuation schemes.
When you were a resident of the foreign country you were entitled to a tax deduction for your contribution to the fund.
Relevant legislative provisions
Income Tax Assessment Act ITAA 1997 Section 290-150
Superannuation Industry (Supervision) Act 1993 Section 45
Reasons for decision
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year.
Under section 290-150 of the ITAA 1997 you are entitled to claim an income tax deduction for superannuation contributions made after 1 July 2007 where certain conditions are met. This provision generally only applies to self employed taxpayers as one of the conditions places a limit on the proportion of income attributed to salary and wages.
Additionally, a further condition is that the contribution must be made to a complying superannuation fund. A complying superannuation fund has the meaning given by section 45 of the Superannuation Industry (Supervision) Act 1993.
A complying superannuation fund is one which the regulator (either the Commissioner of Taxation or the Australian Prudential Regulation Authority) has given notice to the trustee of the fund that they are a complying superannuation fund for a financial year.
As neither the Commissioner nor the Australian Prudential Regulation Authority are regulators for superannuation funds outside of Australia, the fund into which you contribute cannot be a complying superannuation fund. Therefore you are not able to claim an income tax deduction for your fund contributions.
Consequently, you should record the gross amount of your foreign employment income in your Australian tax return.