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Ruling

Subject: Deduction for personal superannuation contributions.

Question

Is your client entitled to claim a deduction for personal superannuation contributions made in the 2010-11 income year under section 290-150 of the Income Tax Assessment Act 1997?

Advice/Answer:

No

This ruling applies for the following period

Year ended 30 June 2011

The scheme commenced on

1 July 2010

Relevant facts

In the 2009-10 income year your client's employment with the previous employer was terminated. At this time severance arrangements took effect and your client was to be paid a number of severance payments within 14 days of the agreed date of cessation of employment.

In the 2010-11 income year your client received payments from the previous employer.

The employment termination payment paid to your client wholly consisted of a taxable component.

Your client lodged their income tax return for the 2010-11 income year in the 2011 calendar year and an income tax assessment was issued to your client shortly afterwards.

In the 2010-11 income year your client commenced their own business.

During the 2010-11 income year your client made personal superannuation contributions to a complying superannuation fund.

In respect of your client's personal contributions, you state in your application that the approved form Deduction for Personal Super Contributions has not been submitted at this point.

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 Subsection 290-160(2).

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).

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).

As your client has not yet lodged a valid notice they are not entitled to claim a deduction in respect of their personal superannuation contributions for the 2010-11 income year.

The Commissioner does not have the discretion to allow either:

· a notice to be lodged after the required deadline, or

· a deduction for the contributions where one of the requirements of the legislation has not been satisfied.

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.

Notice requirements not satisfied

Your client made personal contributions to a complying superannuation fund (the fund) during the 2010-11 income year.

Your client's income tax return for the 2010-11 income year was lodged with the Australian Taxation Office (ATO) in the 2011 calendar year and an income tax assessment was subsequently issued.

As your client's 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 their return.

You state in your application that the approved form Deduction for Personal Super Contributions has not been submitted to the trustee of the fund at this point.

As your client did not lodge a valid notice of intent for their contributions with the fund trustee it is too late for the trustee to accept the notice from your client. Therefore, the requirement under paragraph 290-170(1)(b) of the ITAA 1997 has not been satisfied by your client.

A deduction is not allowable for your client's contributions

Your client did not claim a deduction for personal contributions in their return for this income year. No deduction for the contributions was allowed in the assessment for this income year which was issued to your client in the 2011-12 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 notice requirements in section 290-170 were not satisfied by your client. As the condition in section 290-170 has not been satisfied, it is not necessary to determine whether the other conditions of 290-155, 290-160 and 290-165 of the ITAA 1997 have been satisfied in this case.

Consequently, your client is not entitled to claim a deduction in respect of the personal contributions they made to the fund 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 valid notices of intent.

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. The Commissioner can only exercise discretion when he is given that power under a law he administers.

Further, section 290-170 does not give the Commissioner the power to exercise discretion to allow a deduction, for these contributions, where any of the requirements of this provision have not been satisfied. Even if the other requirements of the legislation may be satisfied, the Commissioner does not have the discretion to allow a deduction while the requirements of section 290-170 have not been satisfied.

This is regardless of the reasons these requirements were not satisfied, or the extent to which those reasons were within or beyond a taxpayer's control.

Conclusion

As the notice of intent to deduct conditions have not been satisfied, the personal contributions your client made during the 2010-11 income year during the 2010-11 income year are not deductible under section 290-150 of the ITAA 1997.