Personal Superannuation Contribution Deductions

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 that rule was passed in November 2016.

Contributions are subject to limits imposed under the superannuation caps. The total of contributions from all sources in relation to the caps needs to be monitored. The limits include super guarantee and salary sacrifice contributions as well as any personal contributions.

The work test, when it applies, is associated with the ability to claim a tax deduction.

Whether or not to make a tax deduction claim for contributions is optional. The preference will depend on individual circumstances which should be considered with professional advice.

Whether To Claim A Personal Super Tax Contribution

Relevant factors (not exhaustive) are listed below.

If a super contribution tax deduction is claimed then:

• they will be treated as concessional contributions and counted as part of the contributions cap
• 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)
• 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 be treated as non-concessional contributions and counted towards the non-concessional contributions cap
• eligibility for the government co-contribution is preserved
• not eligible for LISTO

Are you eligible? Check the requirements:

The requirements have changed over recent years.

Your entitlement to claim a deduction for personal super contributions depends on your age, and the financial year of the deduction claim.

The current (2022-23) position is that the work test has been removed for anyone up to (and under) 75 years of age wishing to make a personal super contribution.

However, if over 67 and under 75, a deduction can only be claimed if the work test is met.

Summary Of Age-Based Work Test Requirements

Year	Work Test or Exemption *	No Work Test
2004–05 to 2018-19	65 to 74 (no exemption)	< 65
2019-20	65 to 74	< 65
2020–21 and 2021–22	67 to 74	< 67
2022–23 onwards	67 to 74 (if claiming a deduction)	< 75

The Work Test

The work test (if it applies) requires at least 40 hours of work in a consecutive 30-day period within each the year.

A work test exemption (from 1 July 2019) can only apply on a ‘one-off’ basis, if

1. you met satisfied the work test in the preceding income year;
2. have a total super balance of less than $300,000 at the end of the previous income year; and
3. you have not relied on the work test exemption in a previous financial year.

If 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.

Other conditions include:

• in general, contributions are required made to a complying superannuation fund or a retirement savings account
• timing of contributions received by the fund is a strict requirement – cheques in the mail or an uncredited EFT don’t count.
• excluded are contributions attributable to the under 55 small business capital gains tax retirement exemption

Up to 30 June 2017 there was a requirement to be not employed or earn less than 10% of income from employment (the calculation of which included assessable income + reportable fringe benefits + reportable superannuation)]

Notice of intention to claim

To enable a deduction claim, or to vary the details of a previous notice, a valid written notice of intent 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.

Other information

• Contributions are subject to the superannuation contributions caps rules and associated concessional and non-concessional annual contribution limits
• Contributions are counted for the purposes of Div 293 which applies higher tax rates to the funds of higher income earners
• Deductible contributions affect any entitlement to government co-contribution benefits
• 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

See also

• Tax-deductible super contributions explained
• Spouse Super Contributions Tax Offset
• SAPTO
• MAWTO

This page was last modified 2023-06-06