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Ruling

Subject: Personal superannuation contributions

Question

Can you vary your notice under section 290-180 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 2010.

Year ended 30 June 2011.

The scheme commenced on:

1 July 2009.

Relevant facts and circumstances

You had a superannuation account with a superannuation fund (the Fund).

During the 20XX income year you deposited X into your account.

You lodged your notice of intent to claim a deduction for personal superannuation contributions for the 20XX income year under section 290-170 of the ITAA 1997 during the 20YY income year with the fund.

The notice was acknowledged and processed by the fund during the 20YY income year and withholding tax was remitted to the Australian Taxation Office (ATO).

During the 20YY income year you advised the Fund that you wished to close your account with them and open an account with their sister company. You were advised this would take a number of weeks.

During the 20YY income year you received correspondence from the ATO advising that your deduction for personal superannuation contributions for the amount of X was denied as you did not satisfy the 'maximum earnings as an employee test'.

On the same day you contacted the Fund notifying them that you were not entitled to claim the deduction. They advised that as your account was closed there was nothing they could do.

You contacted the Fund again the following day and you were advised that your account had only been closed shortly before your phone call the previous day.

You lodged your notice of intent to vary a deduction for personal superannuation contributions with the Fund. You have stated that the reason for the delay between contacting the Fund and lodging your notice of intent to vary a deduction was due to the assurances given to you by the Fund that the issue would be rectified.

The issue was then taken to the Superannuation tribunal.

It was then heard in a conciliation conference during the relevant income year with senior conciliators from the Fund that the account was closed in the morning and the funds were sent by courier later that day. This information however, was only verbally communicated and is not in writing.

Following the conference you received an email that if you obtained written instruction from the ATO to make the requested changes and refund the withholding tax, then the Trustee of the Fund is comfortable in doing so.

You have therefore requested a private ruling or special consideration, in writing, stating that the ATO has no objection for the Fund to amend their records and refund the withholding tax to you.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 290-170.

Income Tax Assessment Act 1997 Paragraph 290-170(2)(c).

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 Subsection 290-180(3A).

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

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

Reasons for decision

Summary

Your original notice of intent to claim a deduction, for personal contributions made in the 20XX income year, was valid.

You will not be able to vary your notice of intent as the superannuation fund no longer held the contributed funds at the time your notice to vary the contribution was lodged with them.

The Commissioner does not have the discretion to allow you to vary the original notice.

Detailed reasoning

Notice of intent to deduct conditions:

Section 290-170 of the ITAA 1997 requires a person to provide a valid notice of their intention to claim the deduction to the trustee of their superannuation fund. The notice must be given before the earlier of:

· the date you lodge your income tax return for the income year in which the contribution was made; or

· the end of the income year following the year in which the contribution was made.

In addition, you must also have been given an acknowledgement of the notice by the trustee of the superannuation fund.

A notice will be valid as long as the following conditions apply:

· the notice is in respect of the contributions;

· the notice is not for an amount covered by a previous notice;

· at the time when the notice is given:

· you are a member of the fund or the holder of the retirement savings account (RSA);

· the trustee or RSA provider holds the contribution (for example, a notice will not be valid if a partial roll-over of the superannuation benefit which includes the contribution covered in the notice has been made);

· the trustee or RSA provider has not begun to pay a superannuation income stream based on the contribution; or

· before the notice is given:

· a contributions splitting application has not been made in relation to the contribution; and;

· the trustee or RSA provider to which you made the application has not rejected the application.

During the 20YY income year you lodged your notice of intent to claim a deduction for personal superannuation contributions made during the 20XX income year under section 290-170 of the ITAA 1997 with the Fund. The notice was acknowledged and processed.

As such, the above is satisfied and your original 'notice of intent' is valid.

Varying a valid notice of intent:

Section 290-180 of the ITAA 1997 discusses the conditions surrounding the varying of a notice of intent to claim a personal superannuation contribution deduction once it has been lodged with the fund.

Subsection 290-180(2) of the ITAA 1997 provides that a valid notice can be varied to reduce, including to nil, an amount stated in relation to the contribution You do so by giving notice to the trustee in the approved form.

Generally, a valid notice can be varied before whichever of the following occurs first, the:

· day the person lodges their income tax return for the year; or

· end of the income year following the income year in which they made the contributions.

However, once a valid notice has been provided to the fund, regardless of the circumstances, a member cannot vary their notice of intent if:

· they are no longer a member of the superannuation fund;

· the superannuation fund no longer holds the contributions; or

· the superannuation fund has begun to pay a super income stream based wholly or in part on the contribution.

The facts state that your account with the Fund was closed shortly before you first contacted them during the 20YY income year. However the facts also state that at the time of your initial phone call, the Fund still held the funds as they were not couriered until later that day.

During the abovementioned phone call you were advised that there was nothing the Fund could do with regards to refunding the tax withheld as your account was closed. Ongoing contact was made with the Fund after this time and you have stated that you were assured by the Fund that something would be done to rectify the situation.

You have stated the above as the reason for not providing your notice of intent to vary a deduction for personal superannuation contributions to the trustee of the fund until over a week after your initial contact with them.

Although verbal contact was made with the Fund when the funds were still held by the fund, this does not constitute giving notice to the trustee in the approved form. It was not until over a week later that you lodged the variation notice in its approved form and at this time, the Fund no longer held your funds. Therefore one of the conditions listed above have not been satisfied and you cannot vary your valid notice.

As you cannot vary your notice to nil, the trustee of the Fund cannot amend their records and therefore the tax withheld from the contribution made during the 20XX income year cannot be refunded.

Commissioner's discretion to vary the notice

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

Unfortunately, section 290-180 of the ITAA 1997 does not give to the Commissioner the power to exercise his discretion to grant an extension of time for a person to lodge a variation of a valid notice of intent.

Further, section 290-180 does not give the Commissioner the power to exercise discretion to vary a valid section 290-170 notice where any of the requirements of this provision have not been satisfied. In both cases 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.

Consequently, the Commissioner has no discretion to vary your original notice or order the Fund to amened their records and refund the tax withheld to you.