Edited version of your private ruling

Authorisation Number: 1012485339100

Ruling

Subject: Personal superannuation contributions - variation of notice

Question

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

Answer

No.

This ruling applies for the following period:

Year ended 30 June 2012.

The scheme commenced on:

1 July 2011.

Relevant facts and circumstances

Your client held a superannuation account with a superannuation fund (the Fund).

During the relevant income year your client, made a personal superannuation contribution to this account.

Your client lodged a notice of intention to claim a deduction for personal superannuation contributions for the relevant income year under section 290-170 of the ITAA 1997 with the Fund.

The notice was acknowledged and 15% withholding tax was remitted to the Australian Taxation Office (ATO).

Following this, your client's benefits were rolled out of the Fund into a self-managed superannuation fund (SMSF).

Your client was later advised by the ATO that their deduction for personal superannuation contributions was denied.

Your Client then contacted the Fund to have the withholding tax refunded. The Fund advised that as they no longer hold the contribution, they could not vary the notice of intention and therefore cannot refund the money.

You are seeking advice as to how the tax withheld can be recovered.

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 client's original notice of intention to claim a deduction, for personal contributions made in the relevant income year, was valid.

Your client will not be able to vary their notice as the superannuation fund no longer held the contributed funds at the time your client sought to vary their notice.

The Commissioner does not have the discretion to allow your client 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:

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

o 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);

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

· before the notice is given:

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

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

Your client's notice of intention to claim a deduction for personal superannuation contributions for the relevant income year under section 290-170 of the ITAA 1997 was acknowledged by the Fund and 15% tax was withheld.

As such, the above is satisfied and your client's original notice is valid.

Varying a valid notice of intent:

Section 290-180 of the ITAA 1997 discusses the conditions for varying of a notice of intention 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:

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

o 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:

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

o the superannuation fund no longer holds the contributions; or

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

The facts state that your client rolled their benefits over to a SMSF before their deduction for personal superannuation contributions was denied. As such, when your client contacted the Fund to have the notice varied, the fund no longer held the contributed funds. Based on the above, the notice of intent cannot be varied.

As your client cannot vary their notice to nil, the trustee of the Fund cannot amend their records and therefore the tax withheld from the contribution made during the relevant 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 client's original notice or order the Fund to amend their records and refund the tax withheld.