Edited version of administratively binding advice

Authorisation Number: 1012410881866

This edited version of your advice will be published in the public Register of private binding rulings after 28 days from the issue date of the advice. The attached ATO advice fact sheet has more information.

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Advice

Subject: Non-concessional contributions

Question

Can you claim a refund of the tax deducted by your superannuation funds in relation to your personal contributions?

Advice

No.

This advice applies for the following period:

For the year ended 30 June 2010

The arrangement commences on:

1 July 2009

Relevant facts and circumstances

During the relevant income year you made personal superannuation contributions to superannuation fund 1 (Fund 1) and superannuation fund 2 (Fund 2).

Both funds are complying superannuation funds.

You submitted a notice to each fund advising you intended to claim a deduction for the personal superannuation contributions made in the relevant income year.

In a letter dated during the X income year, Fund 1 acknowledged the receipt of your completed notice of intent to claim or vary a deduction for personal contributions received in the relevant income year.

Fund 1 also confirmed that your personal superannuation contributions had been allocated to your member account during the relevant income year.

Your statement from Fund 2 for the period of the relevant year, shows an amount as 'Personal after-tax contributions'.

You intended the contributions made to each fund to be non-concessional contributions, however, the contributions were treated as concessional contributions and tax of 15% was withheld by each fund.

You have advised that income tax of an amount was deducted from your account with Fund 1 in relation to the personal contributions you made covered by the intention to claim deduction notices.

An e-mail from Fund 2 to you dated during the Y income year stated that an amount of income tax was deducted from your account with Fund 2 as you advised the Fund that you intended to claim an amount as a deduction for a personal contribution The e-mail advised that on during the X income year Fund 2 received your notice of intent to claim or vary a deduction for personal super contributions request.

This request advised that you intended to claim only part of your personal contributions was a deduction, therefore 15% contribution tax was applied to the lower amount. This tax was deducted from your account during the subsequent income year.

Subsequently, during the X income year, an income tax assessment issued for the relevant income year. You did not claim a deduction for personal superannuation contributions in your income tax return for this income year.

Relevant legislative provisions

Taxation Administration Act 1953 Division 359 to Schedule 1

Income Tax Assessment Act 1997 Subdivision 290C

Income Tax Assessment Act 1997 Section 290-170

Income Tax Assessment Act 1997 Section 290-180

Income Tax Assessment Act 1997 Subsection 290-180(1)

Income Tax Assessment Act 1997 Subsection 290-180(2)

Income Tax Assessment Act 1997 Subsection 290-180(3)

Income Tax Assessment Act 1997 Paragraph 290-180(3)(a)

Income Tax Assessment Act 1997 Paragraph 290-180(3)(b)

Income Tax Assessment Act 1997 Subsection 290-180(3A)

Income Tax Assessment Act 1997 Paragraph 290-180(3A)(a)

Income Tax Assessment Act 1997 Paragraph 290-180(3A)(b)

Income Tax Assessment Act 1997 Paragraph 290-180(3A)(c)

Income Tax Assessment Act 1997 Subsection 290-180(4)

Income Tax Assessment Act 1997 Paragraph 290-180(4)(a)

Income Tax Assessment Act 1997 Paragraph 290-180(4)(b)

Income Tax Assessment Act 1997 Paragraph 290-180(4)(c)

Income Tax Assessment Act 1997 Section 292-20

Income Tax Assessment Act 1997 Subsection 292-85(2).

Income Tax Assessment Act 1997 Subsection 295-190(1).

Income Tax (Transitional Provisions) Act 1997 Section 292-20

Reasons for decision

The ATO is not obliged to provide written advice addressing an entity's specific circumstances other than in the form of a private ruling under Division 359 to Schedule 1 of the Taxation Administration Act 1953 (TAA).

However, in the interests of sound administration, the ATO's practice has been to provide administratively binding advice in a limited range of circumstances in response to a taxpayer's request for advice. In addition, the ATO provides a substantial amount of guidance through publications, its website and its client contact areas.

Attachment B to Law Administration Practice Statement PS LA 2008/3 Provision of advice and guidance by the ATO contains an exhaustive list of those circumstances in which the ATO can provide administratively binding advice to a taxpayer.

If a taxpayer requests written advice on any of the listed topics in connection with their own particular circumstances, it must be treated as a request for administratively binding advice. The request must be in writing. It must fully and accurately identify the parties to the arrangement and disclose all relevant facts. Furthermore, no fundamental assumptions can be made about the arrangement. The arrangement must be in such serious contemplation that its material elements are settled and clearly stated by the taxpayer.

The provision about which administratively binding advice is given need not be a provision of income tax law. It can be about a superannuation, excise or any other law administered by the Commissioner under which extent of liability is worked out and is a law which does not have a legally binding rulings system (for example superannuation guarantee charge).

The question you have raised relates to the application of the Superannuation (Excess Non-concessional Contributions Tax) Act 2007. This is not a relevant provision for the purposes of the TAA. Therefore, the Commissioner is unable to provide a private ruling on the matter that you have raised in your question.

However, we will provide administratively binding advice on the question raised in your application.

Summary

The two notices of intent to claim a deduction, for personal contributions made to the funds in the relevant income year, were valid.

You cannot vary these notices for the following reasons:

· During the X income year, you lodged your income tax return for the relevant income year, which was the year during which the contributions were made to the fund;

· The notice was not varied before the end of the next income year that is 30 June Z.

The contributions covered by a valid notice represent assessable income of your superannuation funds in the relevant income year. The tax paid on these contributions is a tax liability payable by each fund and not by you. As the liability is payable by the fund, you cannot claim a refund from the Australian Tax Office of the tax deducted by your superannuation funds in relation to your personal contributions.

Your contributions covered by your notices to Fund 1 and Fund 2 in the relevant income year are concessional contributions. The remaining amounts are non-concessional contributions.

Detailed reasoning

Request for a refund of tax deducted from the personal contributions

You are requesting that the income tax deducted in respect of your personal contributions be refunded.

As noted in the facts, income tax was deducted from your superannuation accounts in relation to the personal contributions covered by the original valid notices.

Even though the effect of the tax paid by each of your superannuation funds was to reduce your account balance, you are not personally liable for the income tax payable by the funds on these personal contributions in the relevant income year. It is not tax payable by you, but rather tax payable by Fund 1 and Fund 2.

Certain personal contributions are included in the assessable income of a superannuation fund in accordance with the table in subsection 295-190(1) of the ITAA 1997. Item 1 of the table shows that a personal contribution covered by a valid and acknowledged notice under section 290-170 is assessable income of a complying superannuation fund.

Accordingly, the contributions covered by your valid notices represent assessable income of each fund under subsection 295-190(1) of the ITAA 1997 in the relevant income year. This means that the tax paid on these contributions is a tax liability payable by each fund and not by you.

Refunds of income tax arise from an assessment, or amended assessment, made in relation to the income tax return of the taxpayer who paid the tax. Therefore a refund of tax cannot be made without an amendment being made to a taxpayer's return. Further, an amendment to a tax return can only be made in respect of the relevant provisions of the income tax legislation.

Accordingly, a refund of the tax paid on your personal contributions can only result from an amendment to the income tax return of each fund. Further, there are no provisions in the income tax legislation for tax paid by a superannuation fund to be refunded directly to a member.

Personal superannuation contributions made in the relevant income year

Where all the conditions in subdivision 290-C of the ITAA 1997 are satisfied, a person can claim a deduction for personal contributions they make to a superannuation fund.

These conditions are explained in detail in Taxation Ruling TR 2010/1 'Income Tax: superannuation contributions'.

One of these conditions, in section 290-170 of the ITAA 1997, is that the member making a contribution must provide a valid notice of intent to claim a deduction (the notice) to their superannuation fund. The notice must be in the approved form and must have been given to the fund trustee by the required time. The member must also have been given an acknowledgment of receipt of the notice by the fund trustee.

As described in the facts, you have satisfied the notice of intent to deduct condition in section 290-170 of the ITAA 1997 and each fund acknowledged that notice.

Variation of a notice of intent to deduct conditions

In accordance with subsection 290-180(1) of the ITAA 1997 a person cannot revoke or withdraw a valid notice of intent in relation to a personal contribution. However, a valid notice can be varied under section 290-180 subject to a number of restrictions as follows:

290-180(2) You can vary a valid notice, but only so as to reduce the amount stated in relation to the contribution (including to nil). You do so by giving notice to the trustee or the RSA provider in the approved form.

290-180(3) However, you cannot vary a valid notice after:

(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.

290-180(3A) The variation is not effective if, when you make it:

(a) you were not a member of the fund or the holder of the RSA; or

(b) the trustee or RSA provider no longer holds the contribution; or

(c) the trustee or RSA provider has begun to pay a superannuation income stream based in whole or part on the contribution.

290-180(4) Subsection (3) does not apply to a variation if:

(a) you claimed a deduction for the contribution (or a part of the contribution); and

(b) the deduction is not allowable (in whole or in part); and

(c) the variation reduces the amount stated in relation to the contribution by the amount not allowable as a deduction.

Relevant to this case are the restrictions in subsection 290-180(3) of the ITAA 1997 concerning whether, at the time the variation notice was given:

· you had lodged your income tax return for the income year in which the contributions were made (paragraph 290-180(3)(a)), or

· the end of the next income year (paragraph 290-180(3)(b)).

A person who intends to deduct their personal superannuation contributions must give to their superannuation provider a valid notice in the approved form.

However, the notice may be varied 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.

In the facts of this case you have lodged your income tax return for the relevant income year. Therefore you cannot now vary the notice under the restrictions in subsection 290-180(3) of the ITAA 1997.

Excess contributions tax

Contributions made to a complying superannuation fund will be subject to annual caps.

Concessional contributions include contributions made by a member that are included in a superannuation fund's assessable income (section 292-25 of the ITAA 1997).

In your case, this will include the amount covered by your notices to Fund 1 and Fund 2. For the relevant income year, a person's concessional contributions cap is $25,000, or $50,000 if aged 50 years or over (section 292-20 of the ITAA 1997 and section 292-20 of the Income Tax (Transitional Provisions) Act 1997).

Non-concessional contributions include personal contributions for which an income tax deduction is not claimed.

In your case, this will include an amount that is not covered by your notice to Fund 2. For the relevant income year, a person's non-concessional contributions cap is $150,000 (subsection 292-85(2) of the ITAA 1997).

Conclusion

In view of all the above, the requirements prescribed in section 290-180 of the ITAA 1997 are not satisfied. Accordingly you cannot vary your valid notices covering the contributions made to the funds.

Therefore, the amount of the deduction stated in the original notice of intent made to each fund, could not and cannot be varied by the fund trustee.

The tax paid on these contributions covered by a valid notice is a tax liability payable by a fund and not by you. As the liability is payable by the fund, you cannot claim a refund from the Australian Tax Office of the tax deducted by your superannuation funds in relation to your personal contributions. There are no provisions in the income tax legislation for tax paid by a superannuation fund to be refunded directly to a member.