Personal superannuation contributions can be claimed as a tax deduction.
Until 1 July 2017, there was a restriction on employees – known as the 10% rule – which prevented tax deductible super contribution claims unless less than 10% of income was from employment-related activities. Legislation to remove the rule was passed in November 2016.
Contributions are subject to limits imposed under the superannuation caps. Employees with super guarantee and possibly salary sacrifice contributions being made as well, the total of contributions from all sources in relation to the caps needs to be monitored.
Whether or not to make a tax deduction claim for contributions is optional.
If a super contribution tax deduction is claimed then:
- the tax deduction benefit will reflect the taxpayer’s marginal rate
- the contribution will be taxed when received by the super fund at 15% (or for higher income earners, 30% of the higher-income slice of [income + contributions] – see here)
- the contributions count towards the concessional cap
- contributions are not eligible for the government co-contribution
- eligibility for LISTO is preserved
If a super contribution tax deduction is NOT claimed then:
- there is no tax deduction benefit, because the contribution is made from “after-tax” funds
- the contribution will not be taxed as a contribution in the receiving super fund
- the contributions will count towards the non-concessional cap
- any eligibility for the government co-contribution is preserved
- not eligible for LISTO
Are you eligible? Check the requirements:
- aged between 18 and 75 years old at the end of the financial year
- included are contributions up to 28 days after the end of the month of turning 75 years old
- contributors aged 65 to 74 years are subject to a work test
- if aged under 18 at end of year of income, earned income from employment or self-employment
- [up to 30 June 2017: not employed or earn less than 10% of income from employment (includes assessable income + reportable fringe benefits + reportable superannuation)]
- contributions are made to a complying superannuation fund or a retirement savings account (RSA)
- contributions are received by the fund before the end of the financial year (this is a strict requirement – cheques in the mail or an uncredited EFT don’t count)
- excluded – contributions attributable to the under 55 small business capital gains tax retirement exemption
Notice of intention to claim
To enable a claim, a valid written notice of intent to claim or vary the deduction must be given to the super fund or RSA and acknowledged in writing:
- To be valid the notice must be given on the tax office form Nat 71121; or
- using a form provided by the super fund (providing it is in approved format); or
- a written and signed declaration containing the required information
The notice is required to be lodged with the super fund by the earlier of the date of the tax return lodgment or 30 June in the year following the date of the contributions.
- Contributions are subject to the superannuation contributions caps rules and associated concessional and non-concessional annual contribution limits
- Tax deductible contributions can be split with a spouse. The Tax Office require that Notice of intent to claim or vary (see NAT 71121 above) be lodged before the contributions splitting application. See more about Contributions splitting
- ‘Employed’ for these purposes takes its meaning from the Super Guarantee rules – see Superannuation Guarantee Ruling SGR 2005/1
- Claiming deductions for personal super contributions – ATO
- Are you eligible to claim a deduction?
- You can now get a deduction for personal contributions
- Spouse Super Contributions Tax Offset
This page was last modified on 28 Sept 2017