A Useful Factsheet
With the financial year-end looming large on 30 June, here’s a summary to help you take advantage of any potential personal tax-deductible super contributions opportunities still available to you for the year.
How can you potentially benefit?
For personal superannuation contributions made on or after 1 July 2017, you no longer have to earn less than 10 per cent of your income from employment (or not have been employed during the financial year) to be eligible to claim a tax deduction.
This makes the tax deduction potentially available to individuals who earn 10 per cent or more of their income from employment for the first time.
This opens up the opportunity to claim a tax deduction for any person who:
- is eligible to contribute to superannuation (eg, under age 65 or aged 65 to 74 and meets a part-time work test), and
- has room left in their concessional contributions cap and
- has enough assessable income to be able to use the tax deduction.
Claiming a tax deduction for personal superannuation contributions may allow you to reduce your taxable income as well as provide a tax effective way to:
- fund insurance within super
- contribute to super where salary sacrifice is not available
- save for a first home deposit
- make in-specie contributions of direct shares into SMSFs.
Are you eligible?
To be eligible to claim a tax deduction for a personal superannuation contribution, you must:
- be under age 751 and eligible to make personal super contributions (eg, meet a part time work test if aged 65 to 74)
- make a personal contribution to a complying superannuation fund
- submit a valid Notice of intent to claim a deduction for personal super contributions, in the approved form, to the superannuation fund trustee within required timeframes.
- receive acknowledgement from the trustee that the valid notice of intent has been received before claiming a tax deduction
- claim a deduction in their tax return for an amount that does not exceed the amount stated in the notice of intent and does not exceed your assessable income less all other deductions.2
Which deductions cannot be claimed?
A deduction cannot be claimed for a personal contribution that is:
- a downsizer contribution
- a capital gain tax (CGT) exempt amount contributed to super as required under the small business retirement exemption
- made to a Commonwealth public sector superannuation scheme in which you have a defined benefit interest
- made to an untaxed fund
- made by a minor unless the minor derives income from employment or carrying on a business.
Good advice can help you
1. The contribution must be made on or before the day that is 28 days after the end of the month in which the client turns 75.
2. Section 26-55(1)(d) limits the amount of the deduction that may be claimed for personal superannuation contributions to assessable income less all deductions except tax losses and deductions for farm management deposits.
Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information. Colonial First State Investments Limited is also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.