Budget 2018 update – Personal superannuation contributions – improving notice of intention to deduct

The Government announced measures aimed at improving the integrity of the notice of intent (NOI) processes for claiming deductions for personal superannuation contribution. An additional $3.1 million of funding will be provided to the ATO to develop a new compliance model for deducting personal super contributions, and to undertake additional compliance and debt collection activities.

The Government said some individuals currently receive deductions on their personal superannuation contributions but do not submit a NOI, despite being required to do so under s 290-170 of the ITAA 1997. This results in their superannuation funds not applying the appropriate 15% tax to their contribution. As the contribution has been deducted from the individual’s income, no tax is paid on it at all, the Government said.

Currently, a notice under s 290-170 of the ITAA 1997 must be given to the super fund by the time the person lodges her or his income tax return for the year in which the contribution is made or, if no return has been lodged by the end of the following income year, by the end of that following year. This requirement is even more important from the 2017-18 income year given that individuals up to age 75 can now deduct personal contributions, regardless of whether they earn 10% or more of their income from employment (provided that the other requirements are satisfied).

The ATO will also modify income tax returns to alert individuals to the NOI requirements with a tick box to confirm they have complied. The ATO is expected to provide guidance to individuals on how to comply if they have not yet done so. This seeks to ensure that any deductible contributions are appropriately taxed by superannuation funds and enable the ATO to deny deductions to individuals who do not comply with the NOI requirements.

This measure is expected to have a gain to revenue of $430 million over the forward estimates through increased compliance and collections from business owners and other non-employees.

Date of effect

1 July 2018.

Source: Budget Paper No 2 [p 39]

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