Claiming a tax deduction for personal superannuation contributions? Make sure the paperwork is correct before you lodge your tax return!

A recently released Private Binding Ruling (reference details at the end of the article) has highlighted the need to ensure that the ATO paperwork is correct before you lodge your tax return.

The fact situation in the Ruling (altered so that the situation occurs in the 2024/25 financial year) was that a member made a personal contribution to their superannuation fund during the 2024/25 financial year. The personal contribution will only be tax deductible if the member provides to the superannuation fund which received the contribution, a “Notice of Intent to claim a tax deduction” (“NOI”) in respect of that contribution. The NOI can be submitted at the time of the contribution or any time until the member lodges their tax return for the 2024/25 financial year. However, an NOI cannot be submitted after the tax return is lodged.

Submitting the NOI to the trustee informs the trustee that the member intends to claim a tax deduction in respect of the contribution. This allows the trustee to treat the contribution as a “deductible contribution” – by deducting 15% of the contribution amount on account of the tax which will be incurred by the trustee, and only allocating 85% of the contributed amount to the member’s account.

The member must still lodge his personal tax return for the 2024/25 financial year and actually claim a tax deduction for the amount of the contribution. The NOI does not constitute the claim for the tax deduction – it merely is notice to the super fund that as a tax deduction is intended to be claimed, the super fund must treat the contribution as a deductible contribution. Further, the trustee must provide an acknowledgment (whether in writing or as an email) to the member that the trustee has received the NOI (this acknowledgment can be given before or after the personal tax return is lodged).

Once the NOI is submitted, the member is now entitled to claim a tax deduction for the contribution (assuming, of course, the other requirements for claiming a tax deduction are satisfied – such as the superannuation fund is a complying fund, the member satisfies the work test (if relevant) and the other conditions).

In a situation covered by the Private Binding Ruling, the member submitted the NOI to the trustee and then immediately lodged his tax return claiming a tax deduction for the contribution. Unfortunately for the member, the super fund rejected the NOI as not being valid as it was not dated. The NOI is a standard Tax Office form which must be correctly completed. By immediately submitting the tax return the member had no opportunity of resubmitting a correctly completed NOI and he could not claim a tax deduction for his personal superannuation contributions as the period in which to submit the NOI had closed.

The outcome of the Private Binding Ruling is both harsh and technically correct. Once the window for submitting NOIs has closed, it is not possible to lodge another NOI to correct the defective NOI. The Commissioner of Taxation does not have any discretion or administrative authority to change or disregard the requirements for claiming a tax deduction for superannuation contributions.

The moral of the story is to only lodge your tax return once the acknowledgment of the trustee has been received (or notice that the NOI is defective and needs to corrected).

While it is not possible to submit a valid NOI after the personal tax return has been lodged, it is possible to submit a variation to an NOI which reduces the amount claimed for the tax deduction. The need to reduce the amount of the tax deduction may arise because the original claimed amount exceeds the member’s taxable income for the relevant year or will reduce the taxable income to be less than the tax free threshold.

The reference number for the Private Binding Ruling is 5010111729592.