Tax Deductible Super

The approach of June 30 provides you with the perfect opportunity to make a tax-deductible contribution to your superannuation if it’s appropriate in your situation.

The laws changed last July – now everybody who is eligible to contribute can make concessional contributions up to $25,000 a year and claim a tax deduction.  To be eligible you must be under 65.  Contributions are also allowed for those aged between 65 and 75 who can pass the work test which involves working just 40 hours in 30 consecutive days.

Keep in mind that the $25,000 limit includes contributions from all sources including the employer 9.5%. Therefore, if you earned $100,000 a year, and your employer contributed $10,000, your maximum personal contribution would be $15,000.
Case Study: Your employer is paying $10,000 in super for you so you decide to make a concessional contribution of $15,000. You will lose $2250 due to the 15% contributions tax but will still have $12,750 working for you in the low tax superannuation environment. Best of all, the tax deduction of $15,000 should get you a tax refund of $5760 which you could contribute as a non-concessional contribution.  This option magically turns your net $12,750 into $18,300. That’s a return of over 22% in the first year.
Just keep in mind that it is Labor Party policy to remove the ability for people to make concessional contributions to superannuation if their employer is contributing for them. One way to get around this is to use salary sacrifice but not all employers offer it. My advice is to act now while you still can. And note carefully what follows.


But make sure you take advice before you make the contribution as getting it wrong could mean loss of the tax deduction. You have to submit a “valid notice of intent to claim a deduction for personal superannuation contributions in the approved form, to the superannuation fund trustee before you lodge your tax return or by the following 30th June whichever is the earliest”. You then need to receive an acknowledgement from the trustee that a valid notice of intent has been received, before you can claim a tax deduction. The timing of these actions in relation to your contribution and what you do next is important.

Case Study: Allen makes a personal contribution to his fund in April 2018, intending to claim it as a deduction when he does his tax. He does not submit a notice of intent at the time. In September, he rolls his three existing super funds into a new fund that offers investment options more suited to his goals.

In early October, Allen is ready to do his tax, and he lodges a notice of intent to claim a deduction for personal super contributions with the fund that now holds the rollovers from his three previous funds.

But that notice is invalid as he has not made any personal contributions to the new fund. The notice would also be invalid if he sent it to the old fund (where he made the contribution) for two reasons: first, when he gives the notice in early October, he is no longer a member of the fund and second, the fund no longer holds his contributions.

Allen has lost his entire tax deduction for the contribution.
Case Study:  Beck makes a $15,000 contribution to super in June 2018 to save for a house deposit. In the following September she starts looking for a home to buy and applies for release of the $15,000 under the First Home Super Saver Scheme. She accidentally declares she does not plan to claim a tax deduction on the $15,000 contribution.

In March 2019 she buys her first home using the FHSS released amount towards the purchase. In June 2019, when catching up on her tax, she submits a notice of intent in order to claim a tax deduction. The notice is invalid because the fund no longer holds her contributions. The tax deduction is denied.
I appreciate that this is complex – but as you have just read, the cost of getting it wrong can be the loss of all or part of your tax deduction. Tread carefully.