Section 26-80 provides that a financing cost connected with a contribution that a taxpayer makes to a superannuation plan is deductible under this Act only if the contribution is deductible under Subdiv 290-B. From 1 July 2007, an employer may be entitled to a deduction for all contributions to a complying superannuation fund or an RSA on behalf of an employee if the rules for employer contributions in Subdiv 290-B are satisfied. Consequently, no deduction is allowed under s 26-80 or any other provision of the Act (eg s 8-1) for financing costs incurred on borrowings to finance personal superannuation contributions.
A “financing cost connected with a contribution” is expenditure incurred to the extent that it relates to obtaining finance to make the contribution. It includes interest and payments in the nature of interest and expenses of borrowing.
A “superannuation plan” means a superannuation fund, an approved deposit fund or an RSA
Generally, an employer can deduct a contribution made to a superannuation fund or an RSA where these three conditions in Subdiv 290-B are satisfied:
The rules on acceptance of contributions by a superannuation fund are set out in the Superannuation Industry (Supervision) Regulations 1994 (SISR) reg 7.04. The effect of these rules, from 1 July 2004, is as follows.
A person under age 65 can make personal contributions without restrictions. A person who has reached age 65, but not age 75, can contribute if the person has been “gainfully employed on at least a part-time basis” during the relevant financial year. A superannuation fund cannot accept contributions from a person who has reached age 75.
“Gainfully employed” means being employed or self-employed for gain or reward in any business, trade, profession, vocation, calling, occupation or employment. A person is “gainfully employed on a part-time basis” during a financial year if the person has worked at least 40 hours in a period of not more than 30 consecutive days in the year.
Similar rules apply where personal contributions are made to an RSA.