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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012611667099

Ruling

Subject: 'Maximum earnings as an employee' condition

Question

Does your client need to satisfy the maximum earnings as an employee condition under subsection 290-160 of the Income Tax Assessment Act 1997 (ITAA 1997) for the 2010-11 income year?

Answer

No.

This ruling applies for the following period:

Year ended 30 June 2013.

The scheme commenced on:

1 July 2012.

Relevant facts and circumstances

Your client is under 65 years of age.

Your client retired from the workforce permanently during the 2009-10 income year.

You have confirmed that your client has not worked in any capacity as an employee since retiring.

Your client was awarded compensation under the Safety, Rehabilitation and Compensation Act 1988 with the first of the payments received during the 2012-13 income year.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 290-150.

Income Tax Assessment Act 1997 Section 290-160.

Superannuation Guarantee (Administration) Act 1992 Section 12.

Superannuation Guarantee (Administration) Act 1992 Subsection 12(3).

Superannuation Guarantee (Administration) Act 1992 Subsection 12(11).

Reasons for decision

Summary

Your client is not engaged in activities that would result in them being considered an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992. Accordingly, the maximum earnings as an employee condition does not apply to your client.

Detailed reasoning

Maximum earnings as an employee condition:

The condition in section 290-160 of the ITAA 1997 requires that if a taxpayer is engaged in any activities that result in them being treated as an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992 (SGAA), then less than 10% of the total of the following must be attributable to those activities:

    • their assessable income for the income year;

    • their reportable fringe benefits (RFB) for the income year; and

    • the total of their reportable employer superannuation contributions (RESC) for the income year.

Subsection 290-160(1) states:

    This section applies if:

    (a) in the income year in which you make the contribution, you engage in any of these activities:

      (i) holding an office or appointment;

      (ii) performing functions or appointment;

      (iii) engaging in work;

      (iv) doing acts or things; and

    (b) the activities result in you being treated as an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992 (assuming that subsection 12(11) of that Act had not been enacted).

The facts state that your client retired permanently from the workforce during the 2009-10 income year and you have confirmed that they have not worked within the capacity of an employee since this time. As your client has not engaged in any of the activities listed in subsection 290-160(1), they are not considered an employee for the purposes of the SGAA 1992.

Accordingly, the maximum earnings as an employee condition under section 290-160 of the ITAA 1997 does not apply to your client for the 2012-13 income year.

Even if your client was considered an employee under the SGAA 1992 and did have to satisfy the maximum earnings as an employee condition, the payments made under the Safety, Rehabilitation and Compensation Act 1988 would not constitute an 'employment activity' and would therefore be excluded from the 10% calculation.


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