My wife is self-employed and had a baby last year for which she claimed the Parental Leave Pay from the Federal Government (a bit over $10K over 18 weeks). She had to enter the amount in Item 1 - Salary or wages in her Tax Return.
She also claimed a deduction for personal superannuation contributions of $5000 she made during the year. The requirements to claim the personal superannuation contribution deduction are that you cannot have more than 10% of your total accessible income from being an employee. As my wife is fully self-employed I thought she would have met this criteria. (Note: all other requirements to claim the deduction have been met).
However, the ATO has sent my wife a letter stating that her deduction for personal superannuation contribution was not allowed due to the amount shown at Item 1 - Salary or wages being more than 10% of her total accessible income for the year.
I thought that since this amount was paid by the government and not from any employer it should not be counted as employment income. So who is correct?