Issue
Whether a taxpayer can claim a deduction under section 82AAT (Income Tax Assessment Act 1936) (ITAA 1936) for personal superannuation contributions where the employer has not provided any superannuation support on their behalf.
Decision
The taxpayer was found to be an 'eligible person' and was entitled to claim a deduction for personal superannuation contributions under section 82AAT (ITAA 1936).
Facts
The taxpayer was employed during the year in which the personal contributions were made. The income from the 'eligible employment' represented 17% of the taxpayer's total assessable income for the year of income. However, the taxpayer's employer did not make superannuation contributions during the year as the employer's business had been wound up and there were no funds to pay the any superannuation benefits or to meet the Superannuation Guarantee Charge.
Reasons For Decision
A taxpayer is able to claim a deduction for personal superannuation contributions if the requirements of subsection 82AAT(1) (ITAA 1936) are met.
In this particular case the decision to allow a deduction for the taxpayer's personal contributions depended largely on whether the taxpayer was an 'eligible person' in relation to the year of income.
Subsection 82AAS(2) (ITAA 1936) defines 'eligible person'. Effectively, a taxpayer is not an 'eligible person' if it is reasonable to expect that during the whole or part of the year of income superannuation benefits would be provided for the person in the event of retirement or, in the event of death, for dependents of the person and those benefits would be wholly or partly provided for the taxpayer by another person (for example, an employer).
Where it is not reasonable to expect that any superannuation benefits including the Superannuation Guarantee Charge will be paid because the employer's business has been wound up and there are no funds available to make the payments , the employee may be an 'eligible person' (Taxation Ruling TR 96/25).
In this particular case it was reasonable to expect that the taxpayer's employer was unable to provide any superannuation benefits or met the Superannuation Guarantee Charge obligations to the taxpayer as the employer's business had been wound up and there were no funds available to make any payments. The taxpayer was accordingly found to be an 'eligible person'.