Edited version of private advice

Authorisation number: 5010103428722

Date of advice: 21 June 2024

Ruling

Subject: Deductibility of personal superannuation contributions

Question

Can you claim a tax deduction under Subdivision 290-C of the Income Tax Assessment Act 1997 (ITAA 1997) for a personal contribution made during the XXX income year?

Answer

No.

This ruling applies for the following periods:

Income years ending XXX

The scheme commences on:

XXX

Relevant facts and circumstances

You made a personal superannuation contribution of $XXX for XXX income year.

This contribution was received by your superfund on XXX with the account number XXX. The superfund opened this account on XXX.

You were born on XXX.

You will be XXX years of age on XXX.

The superfund reported on XXX that the account number XXX was in a retirement phase for the period started XXX. Later, when you tried to claim a tax deduction in XXX, your superfund acknowledged that they inadvertently reported it as a retirement phase account.

On XXX, the superfund reported the annual report for XXX that this account number was in an accumulation phase.

The Transfer Balance Account report shows that you have started the income stream since XXX.

You have submitted the Notice of Intent (NOI) to your superfund to claim a tax deduction of $XXX for XXX income year.

We received a query from your tax agent on XXX in relation to your intention to claim a Personal Superannuation Contribution Deduction (PSCD).

During our conversation with tax agent, they asked if the superfund was allowed to accept the Notice of Intent because the client has started the retirement phase account.

We requested the client to contact the superfund because we cannot change the report from the superfund. We also advised that you cannot claim a PSCD if you have started the income stream.

We received an email from the superfund on XXX to let us know they inadvertently reported the account as a retirement account and the superfund asked if they could unwind the commencement of the pension account.

Furthermore, on the email that we received on XXX, the superfund stated that the ATO provided a ruling for similar situations in the past where the ATO allowed the superfund to unwind the commencement of the retirement account.

We received your private ruling application on XXX

We sent an email to your tax agent on XXX to obtain the authorisation number of the previous private ruling that the superfund referred to. We contacted your tax agent on XXX and they would follow it up with the superfund.

We sent another email to your tax agent on XXX to advise that we requested the required information by XXX.

During our telephone conversation with your tax agent on XXX, we advised that we would proceed with the information we had if the superfund could not provide the requested information by XXX.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subdivision 290-C

Income Tax Assessment Act 1997 Subdivision 290-150

Income Tax Assessment Act 1997section 290-155

Income Tax Assessment Act 1997section 290-165

Income Tax Assessment Act 1997section 290-167

Income Tax Assessment Act 1997section 290-168

Income Tax Assessment Act 1997 Subdivision 290-170

Income Tax Assessment Act 1997 Subdivision 294-20

Reasons for decision

These reasons for decision accompany the notice of private ruling for XXX. While these reasons are not part of the private ruling, we provide them to help you understand how we reached our decision.

Summary

You are not entitled to claim a tax deduction under Subdivision 290-C of the Income Tax Assessment Act 1997 (ITAA 1997) for personal contributions made during the XXX income year.

The Commissioner has no discretion to allow a deduction for a superannuation contribution where the income stream has been started.

Detailed reasoning

Deduction for personal contributions made to a superannuation fund

Subdivision 290-C of the ITAA 1997

A person can claim a deduction for personal contributions made to a superannuation fund for the purpose of providing superannuation benefits for themselves under subsection 290-150(1) of the ITAA 1997. However, subsection 290-150(2) of the ITAA 1997 requires the conditions in section 290-155, section 290-165, section 290-167, section 290-168 and section 290-170 of the ITAA 1997to also be met to claim a deduction for personal contributions made to a superannuation fund.

In addition, subsection 290-150(3) of the ITAA 1997 states that a deduction can only be claimed in the income year in which the person made the personal contributions to the superannuation fund.

In situations where a deduction for personal contributions made to a superannuation fund has been allowed, the personal contributions made to the superannuation fund will be treated as concessional contributions under subsection 291-25 of the ITAA 1997 and included in the assessable income of the superannuation fund to be taxed at a rate of 15%.

Complying superannuation fund condition

To claim a deduction for personal contributions made to a superannuation fund, section 290-155 of the ITAA 1997requires the personal contributions to be made to a complying superannuation fund in the income year in which the personal contributions were made.

The complying superannuation fund must not be:

•         a Commonwealth public sector superannuation scheme in which the person has a defined benefit interest

•         a superannuation fund that would not include the contribution in its assessable income under section 295-190 of the ITAA 1997 (disregarding the operation of Subdivision 295-D of the ITAA 1997)

•         a superannuation fund of a kind prescribed in the regulations.

The personal contributions made to a complying superannuation fund must also not be contributions of a kind prescribed in the regulations that have been made to a superannuation fund of the kind prescribed in the regulations.

Age-related condition

To claim a deduction for personal contributions made to a superannuation fund, subsection 290-165(1) of the ITAA 1997 requires any personal contributions made to a superannuation fund by a person who is under 18 years of age at the end of the income year to be derived from income that is:

•         from carrying on a business

•         attributable to activities, or circumstances, that result in the person being treated as an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992 (assuming that subsection 12(11) of the Superannuation Guarantee (Administration) Act 1992 had not been enacted).

In any other case, subsection 290-165(2) of the ITAA 1997 requires any personal contributions made to a superannuation fund to be made on or before a day that is 28 days after the end of the month in which the person turns 75 years of age.

Contribution must not be a downsizer contribution condition.

To claim a deduction for personal contributions made to a superannuation fund, section 290-167 of the ITAA 1997 requires the personal contributions made to a superannuation fund to not be downsizer contributions covered by section 292-102 of the ITAA 1997.

Contribution must not be a re-contribution under the first home super saver scheme condition

To claim a deduction for personal contributions made to a superannuation fund, section 290-168 of the ITAA 1997 requires the personal contributions made to a superannuation fund to not be contributions that the person has notified the Commissioner about under section 313-50 of the ITAA 1997.

Notice of intent to deduct contributions condition

To claim a deduction for personal contributions made to a superannuation fund, section 290-170 of the ITAA 1997 requires the person to give their superannuation fund a valid notice in the approved form of their intention to claim a deduction.

The notice is not valid if at least one of these conditions is satisfied:

(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.

The valid notice must be given before:

•         if the person has already lodged their income tax return for the income year in which the personal contributions were made to the superannuation fund, on a day before the end of the next income year - the end of that day

•         otherwise, at the end of the next income year.

Acknowledgement of receipt of the valid notice from the superannuation fund must also be received.

In your case, your Notice of Intent for XXX income year is invalid because you have started the income stream in XXX income year.