A taxpayer was unable to claim a deduction for personal super contributions as he was over a year late in giving the required notice to his super fund. This provision is diabolical. To claim a deduction you need to have given the fund a notice of the amount you wish to deduct and got the fund’s written confirmation. The notice has be given by the earlier of when you lodge your return, or 30 June the following year. Once your return is in, you can’t fix it later (if you haven’t yet given the notice). With it being common to lodge late in the following year, ignorance or tardiness is dangerous (and can have serious ‘ripple effects’ through the concessional/non-concessional, and $1.7m TBC/TBA, regimes).
The situation was this.
- During the 2018-19 income year, the taxpayer made personal super contributions of $9,600.
- He lodged his income tax return for that year on 3 July 2019 (3 days after year end).
- In order to claim a deduction under s 290-150 of the ITAA 1997 for personal super contributions, the taxpayer is required under s 290-170 to give to the super fund a valid notice of their intention to claim a deduction.
- The taxpayer in this case did not give that notice until 17 July 2020 (after the 30.6.2020 deadline).
- He was subsequently issued with a private ruling stating that he was not entitled to deduct the super contributions in 2018-19.
The AAT has confirmed the ruling.
- Under s 290-170, where an individual has lodged their income tax return, for the income year in which a super contribution was made, before the end of the next income year (as in this case – just 3 days into the ‘next year’), the required notice must be given by the end of the day on which the return was lodged.
- In this case, that was 3 July 2019 and he did not give that notice until 17 July the following year (2020. The taxpayer was therefore over a year late in giving the notice (a year and 14 days).
The AAT was also unable to grant the taxpayer an extension of time in which to lodge the Notice – as a “COVID victim”. He was made redundant in July 2020 and has been unable to find another job.
- There is no discretion in s 290-170, or in any other provision of the ITAA 1997, to extend the time for giving the notice or to disregard non-compliance with the specified time frame.
- [I could observe that the Commissioner could, conceivably, give himself a power to extend the notice to the fund – under his remedial power in Div 370 of the TAA53. It would not impose any liability on a taxpayer and conceivably is in line with Parliament’s intention. Further, the IGOT has just announce her ‘own motion’ inquiry into the transparency of the exercise of this ‘remedial power’ – see related TT article.]
An extract from the relevant Notice provision (s290-170) is as follows.
Deductibility of contributions
290-170(1) To deduct the contribution, or a part of the contribution:
(a) you must give to the trustee of the fund or the *RSA provider a valid notice, in the *approved form, of your intention to claim the deduction; and
(b) the notice must be given before:
(i) if you have lodged your *income tax return for the income year in which the contribution was made on a day before the end of the next income year – the end of that day; or
(ii) otherwise – the end of the next income year; and
(c) the trustee or provider must have given you an acknowledgment of receipt of the notice.
(Khanna v CofT [2022] AATA 33, AAT, Evans-Bonner SM, 14 January 2022.) [LTN 10, 18/1/22]
[Tax Month – January 2022 – Previous 2021] 26.1.22