A senior technical executive has acknowledged several situations that would compromise the ability of an individual to claim a tax deduction for a personal superannuation contribution, including the need for the person in question to have sufficient assessable income.
“You can’t put yourself into a tax loss [as a result of claiming a deduction for a personal superannuation contribution]. So you have to determine [whether the individual] has enough assessable income [to enable the strategy],” Colonial First State head of technical Craig Day told delegates at The Tax Institute National Superannuation Conference recently held in Sydney.
Day also pointed out there are certain factors that will make the notice of intent to claim a tax deduction for a personal contribution invalid and can sometimes effectively prevent an individual from receiving a tax benefit for the total amount paid into the super fund.
“There are certain things that will invalidate a notice of intention [to claim a tax deduction for a personal contribution and a] rollover is one of those things,” he said.
According to Day, the situation presents itself where a person makes a contribution into their existing fund and then rolls a lesser amount over to an SMSF.
“In that situation, let’s say you put in $27,500 but you only rolled over $10,000, you can still claim a deduction, but I can’t claim [it for the full contributed amount]. There is a partial deduction application [available for these circumstances],” he explained.
He also confirmed commencing a pension with the contribution in question before the notice of intent to claim a tax deduction is lodged will invalidate the notice.
The reason for this is that once a pension has been started the applicable taxable and tax-free components will have been set, voiding the ability to claim a deduction for the personal contribution.
Day added arguing the person could redo the tax components of the pension would not be an option in these circumstances.
