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Ruling

Subject: Deductibility of personal superannuation contributions

Question:

Can the taxpayer claim a deduction for their personal superannuation contributions?

Answer:

No.

This ruling applies for the following periods:

2007-10 income years.

The scheme commences on:

1 July 2007

Relevant facts and circumstances

Since the second quarter of the 2007-08 income year you have been self-employed.

Prior to becoming self-employed, you were employed. During this time you did not claim a deduction for your superannuation contributions.

You have made contributions to a superannuation fund (the Fund) in the 2007-08, 2008-09, and 2009-10 income years.

You wish to deduct your superannuation contributions for the 2007-08, 2008-09, and 2009-10 income years.

In the 2011-12 income year, you provided a written notice to the Fund, stating you intend to claim a deduction for contributions made in the 2007-08, 2008-09, and 2009-10 income years. The Fund subsequently advised you that these deductions are not allowed by the Tax Office.

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).

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

Superannuation Industry (Supervision) Regulations 1994 Subregulation 1.03(1).

Superannuation Industry (Supervision) Regulations 1994 Subregulation 7.01(3) and.

Superannuation Industry (Supervision) Regulations 1994 Subregulation 7.04(1).

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) with the trustee of the superannuation fund and an acknowledgment of that notice by the trustee.

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

(a) the date on which you lodge your income tax return for the income year in which the contribution was made; or

(b) 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.

As you have not lodged the mandatory notices of intent with the superannuation fund trustee within the requisite time frame, you are not entitled to claim a deduction for the personal superannuation contributions made in the 2007-08, 2008-09, and 2009-10 income years.

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 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 personal contributions into your superannuation account with the Fund during three income years: 2007-08, 2008-09, and 2009-10.

In the 2011-12 income year you submitted a notice of intent to the Fund to deduct personal contributions back-dated for the 2007-08, 2008-09, and 2009-10 income years. You state that the Fund has advised you that these deductions are not allowed by the Tax Office.

As noted above, paragraph 290-170(1)(b) of the ITAA 1997 requires the notice of intent to be lodged with the trustee of the relevant superannuation fund no later than the earlier of:

(a) the date on which you lodge your income tax return for the income year in which the contribution was made; or

(b) the end of the next income year.

In your case you attempted to lodge the notices of intent well after the required dates for each of the income years concerned. Consequently, the trustee of the Fund was not in a position to accept and subsequently acknowledge the notices you provided.

Therefore, the requirement under paragraph 290-170(1)(b) of the ITAA 1997 has not been satisfied.

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

A deduction is not allowable for your contribution

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 contributions you made during the 2007-08, 2008-09, and 2009-10 income years.

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 nor any other provision of the ITAA 1997 gives the Commissioner the power to exercise 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 discretion to allow a deduction for your contributions and treat your contributions as concessional contributions, 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 contributions treated as concessional contributions, and to arrange for the payment of income tax in relation to your contributions.

Conclusion

As the notice of intent to deduct conditions have not been satisfied, the personal contributions you made during the 2007-08, 2008-09, and 2009-10 income years are not deductible under section 290-150 of the ITAA 1997.