(1) Section 86-60 does not stop a * personal services entity deducting a contribution the entity makes to a fund or an * RSA for the purpose of making provision for * superannuation benefits payable for an individual whose * personal services income is included in the entity's * ordinary income or * statutory income.
For deductions for superannuation contributions: see Subdivision AA of Division 3 of Part III of the Income Tax Assessment Act 1936 .
(2) However, if:
(a) the individual performs less than 20% (by * market value) of the entity's principal work; and
(b) the individual is an * associate of another individual whose * personal services income is included in the entity's * ordinary income or * statutory income;
the entity's deduction cannot exceed the amount it would have to contribute, for the benefit of the individual, to a * complying superannuation fund or an * RSA in order to ensure that it did not have any * individual superannuation guarantee shortfalls in respect of the individual for any of the * quarters in the income year.
(3) To work out the amount the entity would have to contribute for the purposes of subsection (2), the individual's salary or wages, for the purposes of the Superannuation Guarantee (Administration) Act 1992 , are taken to be the amount that section 86-60 does not prevent the entity deducting for salary or wages it paid to the individual.
Note: Section 86-60 will apply the limitations under sections 85-10 and 85-20 on an individual's entitlement to deductions (but see paragraph 85-10(2)(e) on employment of associates).