Michael Hallinan, special counsel for SUPERCentral, said all four steps to claiming tax deductions must be completed as the ATO has no power to overlook non-compliance.
He said various requirements must be met to claim a tax deduction for personal super contributions and to receive a deadline extension, adding that a recent private binding ruling (1052268337540) was a reminder of the strictness of the rules.
“The ruling was in relation to a situation where the taxpayer made a personal superannuation contribution to a fund with the intention that the taxpayer would claim a personal tax deduction for the contribution. Unfortunately, due to various personal issues, the taxpayer was unable to lodge the Notice of Intention to claim a tax deduction by the due date specified by the legislation,” Hallinan said.
“The taxpayer contacted the ATO on various occasions explaining the reason for the out-of-time giving of the notice to the trustee, claiming that there was an informal practice (supported by his accountant) that a notice of intention could be lodged late if the trustee still accepted the notice.”
He added the ruling was to the effect that the due date for lodging the notice with the trustee was specified in the legislation, and neither the trustee receiving the notice nor the ATO could vary that requirement by accepting a late notice or disregarding the notice requirement.
For Hallinan, the takeaway from this ruling was that there must be complete satisfaction of all legislative requirements relating to valid notices of intent to claim a tax deduction for personal superannuation contributions.
“To quote from the ruling ‘The Commissioner of Taxation does not have any discretion or administrative authority to change or disregard the prescribed requirement’,” he said.
“To successfully claim a tax deduction for your personal superannuation contributions you must – assuming the contribution is made for the 2024–25 financial year – satisfy a number of conditions.”
The first of those conditions, Hallinan said, was the payment contribution, which stipulates that a payment must be made to a superannuation fund during the 2024–25 financial year. The second condition is that the fund must be a complying superannuation fund.
“The third condition is age-related and states that when the contribution is made, the taxpayer must be aged 18 or more but less than age 67. If you have attained age 67 or more when the contribution is made, you must satisfy the work test of ‘40 hours/30 days’ for the 2024–25 financial year. It does not matter whether you satisfied the work test before or after you have attained age 67 or if the 30-day period straddles your 67th birthday,” he said.
“If you have not satisfied the ‘40 hours/30 days’ work test for the 2024–25 financial year, you may be entitled to claim a tax deduction for your personal contribution if they qualify as ‘last drinks’ deductions. However, you can only use the ‘last drinks’ deduction exception once – if the exception has been applied for contributions made in a previous year, it cannot be used again.”
Hallinan said that for contributions to qualify as ‘last drinks’ deductions for the 2024–25 financial year, the taxpayer must have satisfied the gainful employment requirement of “40 hours in 30 consecutive days” for the 2023–24 financial year, and their total superannuation balance at 30 June 2023 was less than $300,000.
The fourth and final condition to claim a deduction is the age 75 requirement, which states that contributions must be made before age 75 or within 28 days of the end of the month an individual turns 75.
“The contribution cannot be a re-contribution of amounts previously released under the First Home Super Saver Scheme or the COVID-19 release schemes. Additionally, a contribution that qualifies as a Downsizer Contribution cannot also be claimed as a deductible personal contribution,” Hallinan said.
Not up to date. The “works test” has been abolished. Only one age related rule now, the “age 75” limit.