Issue
Can the trustee of a superannuation fund (a predecessor fund) accept notice under subsection 82AAT(1C) of the Income Tax Assessment Act 1936 (ITAA 1936) from a person who at the time of seeking to give such notice has ceased to be a member of the fund as a result of being transferred to a successor fund?
Decision
No. The trustee of a predecessor fund is not able to accept notice under subsection 82AAT(1C) of the ITAA 1936 from a person who at the time of seeking to give such notice has ceased to be a member of the fund as a result of being transferred to a successor fund.
Facts
A rationalisation program in relation to superannuation products and funds has taken place.
The program involved a number of 'successor fund transfers' of superannuation members between funds,.
After the date of the successor fund transfer a member sought to give notice under subsection 82AAT(1C) of the ITAA 1936 to the trustee of the predecessor fund to reduce the amount covered by an original notice given under subsection 82AAT(1A) of the ITAA 1936 to that fund.
Reasons for Decision
Former subsection 82AAT(1A) of the ITAA 1936 provided that:
A person who is making or has made a contribution to a fund may give a written notice to the trustee of the fund, stating that the person intends to claim a deduction under this section for the whole or a specified part of the contribution. Subject to subsection (1AA), the trustee must, without delay, give the person a notice acknowledging receipt of the person's notice.
The amount covered by a notice given under subsection 82AAT(1A) of the ITAA 1936 may generally be reduced under subsection 82AAT(1C) of the ITAA 1936 at any time:
A person may at any time give written notice to the trustee of a fund reducing the amount covered by a notice under subsection (1A), but not below the amount that has been allowed as a deduction to the person under this section for contributions covered by the notice.
Paragraph 82AAT(1B)(b) of the ITAA 1936 provides that for notices given under subsection 82AAT(1A) of the ITAA 1936, a person cannot give a valid notice to the trustee after that person has ceased to be a member of the fund.
The giving of notice under subsection 82AAT(1C) of the ITAA 1936 reduces the amount covered by the notice given under subsection 82AAT(1A) of the ITAA 1936. The net amount continues to be covered by the notice under subsection 82AAT(1A).
Subsection 82AAT(1B) of the ITAA 1936 applies restrictions to notices given under subsection 82AAT(1A) of the ITAA 1936. These restrictions also apply to the giving of notice to reduce the amount under subsection 82AAT(1C) of the ITAA 1936. The notice given under subsection 82AAT(1C) can be given 'at any time' but this is subject to the restriction in paragraph 82AAT(1B)(b) of the ITAA 1936 that a person cannot give a valid notice after the person has ceased to be a member of the fund.
Chapter 2 of the Explanatory Memorandum to the Taxation Laws Amendment (Superannuation) Act 1993 (which inserted subsection 82AAT(1C) of the ITAA 1936) confirms that the membership requirement in subsection 82AAT(1B) of the ITAA 1936 applies to notices under subsection 82AAT(1C) where it states:
No adjustment can be made once a member leaves a fund because once benefits have been paid out it is too late for the fund to make the necessary adjustments [New subsection 82AAT(1C)].
Therefore, the trustee of the predecessor fund is unable to accept a notice under subsection 82AAT(1C) of the ITAA 1936 from a person who is no longer a member of the fund.
It should be noted that the principles of former section 82AAT of the ITAA 1936 appear in sections 290-170, 290-175 and 290-180 of the Income Tax Assessment Act 1997 in respect of superannuation contributions made on or after 1 July 2007.