With the end of the financial year quickly approaching, you may be thinking about the tax deductions you could be eligible for. Personal super contributions can be one area that you may be able to claim a tax deduction in if you have contributed to your super fund (other than employer paid superannuation).
If you have made personal contributions to your super fund, or are thinking about doing so in the future, this article will help you determine if claiming a tax deduction is the best solution for you to help make it count for your finances!
This article will help you:
- Determine if you’re eligible for this deduction
- Look at other key areas to consider if you’re claiming this deduction
- Gain knowledge on how to apply
- Reach us for further information
Are You Eligible?
There are a few hoops to jump through if you wish to claim a personal super contribution. The first thing to note is that these contributions are only applied to those funds that are contributed by you from your after-tax income. Therefore, any employer contributed funds are not eligible for the deduction.
To claim the deduction, you must meet all of the criteria listed by the Australian Taxation Office. Some of the main points are listed below:
- You must be a member of the super fund when applying for the deduction
- Your fund can not have previously started to pay an income stream (eg. pension) based on all or part of the contributions that you are wanting to claim
the deduction for - Your fund has accepted the contribution for which you want to claim a deduction for (Note: there may be a delay between payment and acceptance of the
contribution). Make sure you pay by 25 June to allow processing! - You meet age restrictions and working test (if required)
- You have not withdrawn or rolled over to another fund all or part of the contribution that you’re wanting to claim the deduction on (except where there
has been a successor fund transfer).
The timeframe to complete your notice of intent to claim a deduction to your super fund should be on or before whichever of the below dates occurs first:
1. The day that you lodge your income tax return for the financial year in which the contributions were made; or
2. The last day of the income year after the income year in which you made the contributions (or before 30 June).
Need assistance to determine your eligibility? Contact us today!
Key Areas To Consider Before Applying
There are six key areas that will be affected if you decide to claim the deductions for your personal super contributions. These key areas are listed below, however, if you have any questions about the areas below, then we recommend speaking to your accountant to determine how the deduction will affect you.
Taxable Income
This area is, perhaps, the most obvious and the reason that many people claim this deduction. A deduction will reduce your taxable income when you complete your tax return, which consequently, can reduce the amount of tax that you are required to pay.
Treatment In The Fund
The personal super contributions that you claim as part of your tax deduction are also included in your fund’s assessible income, and as such, are taxed at a rate of 15%. You fund withholds this amount from your super account.
Government Super Payments
If you’re claiming a deduction for your personal super contributions, you may also be eligible for a low-income superannuation tax offset on the tax paid on the contribution (note: this does not apply for a super co-contribution on the amount).
Contribution Paps
Although there is no limit to the amount that you can claim as a personal super contribution deduction, there is a cap on the amount of super contributions you can make before you pay extra tax. The limit of super contributions can vary depending on your age, the financial year which the contributions relate to and whether the contributions are concessional (before tax) or non-concessional (after tax).
Division 293
If your income is greater than $250,000 you will be required to pay an additional 15% tax on your super contributions, as part of Division 293.
Income Test
Deductable personal contributions count towards your reportable super contributions, meaning that the deduction could affect your income. This is primarily for the purpose of some tax offsets, deductions, concessions, the Medicare levy surcharge, and certain government benefits and obligations which would need to be considered before making this application.
How to Apply
Step 1: Determine the amount that you wish to claim for your deduction.
Keeping in mind the key areas mentioned above as well as the total amount of personal contributions that have been received by your fund, determine the amount that you wish to claim.
Step 2: Complete a Notice of intent to claim or vary a deduction for personal super contributions
This form is broken into four main sections.
1. Section A for your details
2. Section B for your super fund’s details
3. Section C for your contribution details
4. Section D is for the declaration that the information provided is correct.
Once you have completed your form, you need to send it to your super fund.
Step 3: Receive acknowledgement of a valid notice Finally, your super fund will give you acknowledgement of a valid notice. Once this has been made, you will be unable to revoke or withdraw it. However, you can apply to have it reduced or submit a second form to increase the amount.
Looking for more information? Let us help!
If you would like more information on the above items, feel free to contact us our office on 07 3367 3155 or emailing us at support@walkerhill.com.au
