Edited version of your written advice

Authorisation Number: 1012990435948

Date of advice: 29 March 2016

Ruling

Subject: Deductibility of personal superannuation contributions

Question 1

For the purposes of section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997), does section 290-160 of the ITAA 1997 apply to you in the 20xx-yy income year?

Answer

No

Question 2

For the purposes of section 290-150 of the ITAA 1997, can you claim a deduction for personal superannuation contributions of $xx,xxx made to a superannuation fund during the 20xx-yy income year?

Answer

Yes

This ruling applies for the following period:

Income year ending 30 June 20yy

The scheme commences on:

1 July 20xx

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You are over 18 but less than 70 years of age.

In 20ww-xx income year, you retired from the work force due to ill health.

Prior to your retirement, you purchased a personal income protection policy.

The premiums for the personal income protection policy are paid by you.

During the 20xx-yy income year, you will receive income from the following sources:

• Rental property

• Personal income protection payments

You will not be employed at any time during the 20xx-yy income year.

You intend to make a $xx,xxx personal superannuation contribution to a superannuation fund (the Fund) in the 20xx-yy income year.

The Fund is a complying superannuation fund.

You will provide the trustee of the Fund with a valid written 'Notice of Intent to claim a Deduction' instructions.

You will obtain from the trustee of the Fund an acknowledgment of receipt of the notice of intent to claim a deduction.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 290-150

Income Tax Assessment Act 1997 Section 290-155

Income Tax Assessment Act 1997 Section 290-160

Income Tax Assessment Act 1997 Subsection 290-160(1)

Income Tax Assessment Act 1997 Subsection 290-160(2)

Income Tax Assessment Act 1997 Section 290-165

Income Tax Assessment Act 1997 Section 290-170

Superannuation Guarantee (Administration) Act 1992

Reasons for decision.

Question 1

Summary

The maximum earnings as employee test under section 290-160 of the ITAA 1997 will not apply to you in the 20xx-yy income year.

Question 2

Summary

You are entitled to claim a deduction for $xx,xxx superannuation contribution made in the 20xx-yy income year.

Detailed reasoning

A person can claim a deduction for personal contributions made to a superannuation fund for the purpose of providing superannuation benefits for themselves under section 290-150 of the ITAA 1997. However, the conditions in sections 290-155, 290-160 (if applicable), 290-165 and 290-170 of the ITAA 1997 must also be satisfied for the person to claim the deduction.

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 of the fund in which you made the contribution.

The Fund is a complying superannuation fund, therefore this condition is satisfied.

Maximum earnings as employee condition

According to subsection 290-160(1) of the ITAA 1997, the maximum earnings as employee condition only 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 duties;

(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).

As you retired from employment in the 20ww-xx income year, and will not engage in any employment activities during the 20xx-yy income year, you do not have to satisfy the maximum earnings as employee condition in section 290-160 of the ITAA 1997 in the 20xx-yy income year.

Age-related conditions

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.

As you will be under 75 years of age at all times in the relevant income year, this condition is satisfied.

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 the person lodges their 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 Fund.

A notice will be valid if:

• 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 trustee of the Fund 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); or

• the trustee has not begun to pay a superannuation income stream based on the contribution;

• before the notice is given:

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

• the trustee has not rejected the application.

You intend to provide a written notice to the trustee stating your intention to claim a deduction for the relevant contribution, and you will obtain a written notice from the trustee acknowledging this.

When you have done so, the conditions in section 290-170 of the ITAA 1997 will be satisfied.

Deduction limits

The allowable deduction is limited under subsection 26-55(2) of the ITAA 1997 to the amount of assessable income remaining after subtracting all other deductions (excluding previous year's tax losses and any deductions for farm management losses) from a taxpayer's assessable income.

ATO view documents

Taxation Ruling TR 2010/1 Income tax: superannuation contributions