• Legal database
Legal database
Disclaimer
This edited version has been archived due to the length of time since original publication.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 written advice

Authorisation Number: 1013003914800

Date of advice: 27 April 2016

Ruling

Subject: Deductibility of personal superannuation contributions

Question 1

Is your client eligible to claim a deduction under section 290-150 of the Income Tax Assessment Act 1997 (ITAA 1997) for personal superannuation contributions made in the 2015-16 income year?

Answer

Yes

This ruling applies for the following periods:

Year ended 30 June 2016

The scheme commences on:

1 July 2015

Relevant facts and circumstances

Your client is a member of a complying superannuation fund

Your client will receive a PAYG payment summary - business and personal services income in the 2015-16 income year.

During the 2015-16 income year your client has not and will not be engaged in any of the following activities:

      • holding an office or appointment;

      • performing functions or duties;

      • engaging in work;

      • doing acts or things; and

the activities result in them being treated as an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992.

Your client is not entitled to payment for the performance of duties as a member of an executive body of a body corporate in the 2015-16 income year.

Your client will make a personal superannuation contribution to The Fund in the 2015-16 income year if, eligible to claim a deduction under section 290-150 of the ITAA 1997.

Your client is under 75 years old in the 2015-16 income year.

Assumptions

It is assumed that your client will provide a valid notice to the trustee of the superannuation fund and receive an acknowledgement notice issued by the trustee of the superannuation fund.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 84-10

Income Tax Assessment Act 1997 Paragraph 85-10(2)(f)

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 Section 290-165

Income Tax Assessment Act 1997 Section 290-170

Reasons for decision

Summary

Based on the information provided your client does qualify for a deduction for personal superannuation contributions proposed to be made in the 2015-16 income year, as they satisfy the legislative requirements for claiming a deduction under section 290-150 of the ITAA 1997.

The personal services income provisions do not preclude your client from claiming a deduction for superannuation contributions

Detailed reasoning

Personal services income (PSI)

The PSI provisions do not preclude your client from claiming a deduction for superannuation contributions. Paragraph 85-10(2)(f) of the ITAA 1997 provides that a non-employee in receipt of PSI is not precluded from claiming a deduction in relation to superannuation contributions, to the extent that a contribution to a fund is made in order to obtain a superannuation benefit for themselves or for their SIS dependants in the event of their death.

Personal superannuation contributions made in the 2015-16 income year

An individual 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, provided certain conditions are met.

Subsection 290-150(2) provides that the conditions in sections 290-155, 290-160 (if applicable), 290-165 and 290-170 must all be satisfied before the person can claim a deduction for the contributions made in that income year.

Complying superannuation fund condition

The condition in section 290-155 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 the contribution is made.

In this case, your client will make personal superannuation contributions to a complying superannuation fund, if eligible to claim a deduction for personal contributions. The requirements of section 290-155 of the ITAA 1997 will therefore be satisfied.

Maximum earnings as an employee condition

    1. Subsection 290-160(1) of the ITAA 1997 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 duties;

        (iii) engaging in work;

        (iv) doing acts or things; and

      (b) The activities result in your 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).

It is therefore only those persons who are engaged in an 'employment' activity in the income year in which they make a contribution that need to meet the maximum earnings test.

Paragraphs 58 and 248 of Taxation Ruling TR 2010/1 Income tax: superannuation contributions states:

    58. Those persons who have not engaged in an 'employment' activity in the income year in which they make a contribution… are not employed at any time during the year, are not subject to the maximum earnings test. [emphasis added]

    248. A person will be engaged in an 'employment' activity if they are engaged in an activity in the income year that results in them being treated as an employee for the purposes of the SGAA.

Your client has not and will not engage in any activities in the 2015-16 income year that would make them an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992.

Accordingly, your client will not be subject to the maximum earnings test under section 190-160 of the ITAA 1997.

It should also be noted that section 84-10 of the ITAA 1997 provides that the personal services income measures do not imply for the purposes of any Australian law that the individual is an employee. Whether or not an individual is subject to the personal services income measures is distinct from and separate to the determination of whether that individual is an employee within the meaning of section 12 of the SGAA.

Age related condition

As your client will under 75 years old in the 2015-16 income year in which the intended contribution will be made, the age-related requirement of section 290-165 off the ITAA 1997 will be satisfied.

Notice of intent to deduct contributions

In order to claim a deduction your client will need to satisfy the notice requirements under section 290-170 of the ITAA 1997. For the purposes of this private ruling the Commissioner has assumed these requirements will be satisfied.

Please note the deduction is claimed against total assessable income, not specific components of your client's assessable income (for example, PSI income). Furthermore, in accordance with Section 26-55 of the ITAA 1997, the deduction cannot add to or create a loss for your client.


Back to top