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Adviser Question:
My client made a personal contribution of $30,000 during the 2023–24 financial year. She submitted a valid notice of intent (NOI) to her fund stating that she would claim $10,000 of the contribution as a tax deduction.
However, after discussions with her accountant, she now wishes to claim $25,000 of the contribution as a tax deduction. Can she vary her previous NOI to increase the amount of contribution to be claimed as a deduction?
Answer:
While a previous NOI can be varied to reduce the amount of contribution an individual intends to claim as a deduction, it cannot be varied to increase the amount of contribution intended to be claimed as a deduction. However, a client can lodge a new valid NOI for any additional amounts that they want to claim as a deduction.
In this case, your client could provide the fund with a new NOI to notify them of her intention to claim $15,000 of her personal contributions as a tax deduction, provided this is done within the usual timeframes1.
The relevant sections of the second NOI would be completed as follows:
The fund would then have two valid NOIs for the 2023–24 financial year:
- First NOI covers: $10,000 of your client’s personal contributions.
- Second NOI covers: $15,000 of your client’s personal contributions.
Provided she is otherwise eligible, your client could then claim a tax deduction for $25,000 of her personal contributions in her 2023–24 income tax return.
The ATO also discusses the process to increase the amount of personal contributions to be claimed as a tax deduction (including an example) in this section of its NOI instructions.
[1] A NOI must be provided by the earlier of the date the client lodges their income tax return for the year of contribution and the end of the financial year after the year of contribution. Certain events after a contribution is made (eg commencing an income stream, withdrawing, or rolling over benefits) may also impact the validity of any future NOI.
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The information contained in this update is based on the understanding Avanteos Investments Limited ABN 20 096 259 979, AFSL 245531 (AIL) and Colonial First State Investments Limited ABN 98 002 348 352, AFSL 232468 (CFSIL) has of the relevant Australian laws as at the article date. As these laws are subject to change you should refer to our website at www.cfs.com.au or talk to a professional adviser for the most up-to-date information. The information is for adviser use only and is not a substitute for investors seeking advice. While all care has been taken in the preparation of this document (using sources believed to be reliable and accurate), no person, including AIL, nor CFSIL, accepts responsibility for any loss suffered by any person arising from reliance on this information. This update is not financial product advice and does not take into account any individual’s objectives, financial situation or needs. Any examples are for illustrative purposes only and actual risks and benefits will vary depending on each investor’s individual circumstances. You should form your own opinion and take your own legal, taxation and financial advice on the application of the information to your business and your clients.
Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information.
AIL and CFSIL are also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.