Edited version of private advice

Authorisation Number: 1012654428609

Ruling

Subject: Deduction for personal superannuation contributions

Question

Are you entitled to claim a deduction for personal superannuation contributions made in the 2013-14 income year under section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes, provided all the required conditions are satisfied.

This ruling applies for the following period

Year ended 30 June 2014.

The scheme commenced on

1 July 2013.

Relevant facts and circumstances

The taxpayer is a non-resident living overseas.

The taxpayer's date of birth is under 50 years of age.

The taxpayer intends to make personal superannuation contributions to a super fund and claim a deduction for the contribution.

The Fund is a complying superannuation fund.

The contributions will be made for the purpose of providing superannuation benefits for the taxpayer (or their dependants before or after their death).

The taxpayer is based overseas and employed full-time by an overseas employer.

The taxpayer receives rental income from Australia.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subsection 26-55(2).

Income Tax Assessment Act 1997 Section 290-150.

Income Tax Assessment Act 1997 Subsection 290-150(1).

Income Tax Assessment Act 1997 Subsection 290-150(2).

Income Tax Assessment Act 1997 Subsection 290-150(3).

Income Tax Assessment Act 1997 Section 290-155.

Income Tax Assessment Act 1997 Section 290-160.

Income Tax Assessment Act 1997 Section 290-165.

Income Tax Assessment Act 1997 Subsection 290-165(2).

Income Tax Assessment Act 1997 Section 290-170.

Income Tax Assessment Act 1997 Subsection 290-170(1).

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

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

Income Tax Assessment Act 1997 Section 290-175.

Income Tax Assessment Act 1997 Section 292-25.

Income Tax Assessment Act 1997 Section 292-25(2).

Superannuation Industry (Supervision) ACT 1993 Section 45(6)

Reasons for decision

Summary

Where the taxpayer provides a valid notice of intent to claim the deduction to the Fund and the Fund acknowledges receipt of this notice, the deduction is not more than the amount covered by the notice and the deduction does not create or increase a loss to be carried forward the taxpayer will satisfy all the required conditions to claim a deduction. In that case, the taxpayer can claim a deduction for the personal superannuation contribution made to the Fund in the 2013-14 income year.

Detailed Reasoning

Deduction for personal deductible 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 for personal contributions made to a superannuation fund for the purpose of providing superannuation benefits for themselves (or their dependants after their death).

Subsection 290-150(2) of the ITAA 1997 provides that the conditions in sections 290-155, 290-160, 290-165 and 290-170 of the ITAA 1997 must also be satisfied before a person can claim a deduction for the contributions made in that income year. The conditions are:

• Where the contribution is made to a superannuation fund, the fund must be complying in the financial year that the contribution was made;

• Where applicable, you must not exceed the 'maximum earnings as employee' condition;

• You must satisfy the age related conditions; and

• You must have given a valid notice of intent to the superannuation fund or RSA provider in the approved form by the required time and received acknowledgment from the fund.

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

The taxpayer intends to make personal superannuation contribution to the Fund during 2013-14 income year.

Complying superannuation fund condition

The condition in section 290-155 of the ITAA 1997 requires that where the contribution is made to a superannuation fund, it must be made to a complying superannuation fund for the income year in which the contribution is made.

In this case, the taxpayer intends to make personal superannuation contributions to a complying superannuation fund. Therefore, this requirement will be satisfied.

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 results in them being treated as an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992 (SGAA 1992), to deduct a contribution 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) total for the income year;

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

In regards to the maximum earning as an employee condition TR 2010/1 states at paragraph 65:

In the application of the maximum earnings test, the relevant 'employment' activity need not be an activity in Australia. For a non-resident, the income attributable to employment outside Australia is not assessable income in Australia and so will not be counted in the maximum earnings test. …

In this case, the taxpayer has advised that for the 2013-14 income year she/he:

• is a non-resident living overseas;

• is full time employed overseas; and

• has investment property in Australia and is receiving an amount of rental income.

As the taxpayer is a non-resident, the income they earn outside of Australia does not count towards the maximum earning test. The taxpayer does not have any income from employment activities in Australia therefore this condition is satisfied.

Age-related condition

Under subsection 290-165(2) of the ITAA 1997, the ability to claim a deduction ceases for contributions that are made after 28 days from the end of the month in which the person making the contribution turns 75 years of age.

The taxpayer satisfies the age related condition.

Notice of intent to deduct conditions

Subsections 290-170 (1) and (2) of the ITAA 1997 set out the notice and validity requirements which must be satisfied to claim a deduction for superannuation contributions.

Subsection 290-170(1) of the ITAA 1997 requires you to provide your superannuation or RSA provider with a valid notice of intent to claim a deduction in the approved form. The notice must be provided before lodging your income tax return for the year or within 12 months of the end of the income year if you have not lodged your return by that time. The trustee must also acknowledge receipt of the notice.

Subsection 290-170(2) of the ITAA 1997 requires the following conditions to be satisfied for a notice of intent to deduct to be valid:

a) the notice is not in respect of the contribution;

b) the notice includes all or a part of an amount covered by a previous notice;

c) when you gave the notice:

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

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

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

d) before you gave the notice:

(i) you had made a contributions-splitting application (within the meaning given by the regulations) in relation to the contribution; and

(ii) the trustee or RSA provider to which you made the application had not rejected the application.

The taxpayer must provide a valid notice of intent to claim the deduction to the Fund and receive an acknowledgment of receipt of the notice from the Trustee of the Fund prior to claiming the deduction.

Deduction limited by amount specified in notice

Subsection 290-175 of the ITAA 1997 states that the deduction cannot be more than the amount covered by the notice given under section 290-170 of the ITAA 1997.

Provided the amount of the deduction the taxpayer will claim does not exceed the amount specified in the section 290-170 notice, the taxpayer will also satisfy this requirement.

Deduction limits

Allowable deductions are limited under subsection 26-55(2) of the ITAA 1997 to the amount of assessable income remaining after subtracting all other deductions from a taxpayer's assessable income. Furthermore, allowable deductions cannot create or increase a loss to be carried forward.

Concessional contributions

Under subsection 292-25(2) of the ITAA 1997, concessional contributions include personal contributions claimed as a tax deduction. For the 2013-14 income tax year the concessional contributions cap is $25,000 for those under 50 years of age. Any additional amounts contributed during the 2013-14 income year will exceed the concessional contributions cap, and will be added towards the taxpayer's assessable income and taxed at her marginal tax rate.

The taxpayer intends to contribute an amount under the concessional contributions cap, to the Fund in the 2013-14 income year.

Conclusion

Where the taxpayer provides a valid notice of intent to claim the deduction to the Fund and the Fund acknowledges receipt of this notice, the deduction is not more than the amount covered by the notice and the deduction does not create or increase a loss to be carried forward the taxpayer will satisfy all the required conditions for deductibility under section 290-150 of the ITAA 1997. In that case, the taxpayer can claim a deduction for the personal superannuation contribution made to the Fund in the 2013-14 income year.