Superannuation: Can we claim deductions for personal super contributions?

Some taxpayers wish to contribute personal superannuation in their Industry superfund or self managed superfund accounts. At the time of filing their tax return they are in dilemma weather the deduction can be claimed or not.

The short answer is Yes. But there is some eligibility criteria and procedure.

Who can claim deductions for personal super contributions?

This includes people who get their income from:

  • salary and wages
  • a personal business (for example, self-employment)
  • investments (including interest, dividends, rent and capital gains)
  • government pensions or allowances
  • super
  • partnership or trust distributions
  • a foreign source.

From 1 July 2017 the requirement that you derive less than 10% of your income from employment sources has been abolished and regardless of your employment arrangement you may be able to claim a tax deduction. Those aged 65 to 74 will still need to meet the work test in order to be eligible to make a contribution and claim a tax deduction.

Can I claim deductions for contributions paid by my employer from my before-tax income (including the compulsory super guarantee and salary sacrifice amounts)

No you cannot claim contributions paid by your employer from your before-tax income (including the compulsory super guarantee and salary sacrifice amounts)

If you are self-employed you can claim a tax deduction on your super contributions. Most people can contribute up to $30,000 per year and the tax benefit will be similar to an employee salary sacrificing. If you’re over 49 you can contribute up to $35,000 per year.

This effectively allows all individuals, regardless of their employment circumstances, to make concessional super contributions up to the concessional cap. Individuals who are partially self-employed and partially wage and salary earners and individuals whose employers do not offer salary sacrifice arrangements will benefit from these changed arrangements.

How to make a claim for superannuation deduction?

You have to notify your superannuation fund that you want to claim the deduction for your personal contribution.  There are 4 ways to inform your Superannuation fund of your intention of claiming the contribution in your personal tax return:

  1. You can Complete and Lodge a form – Notice of intent to claim or vary a deduction for personal super contributions (NAT 71121) – Download Here – Notice of intent to claim or vary a superannuation deduction
  2. You can use your superannuation fund’s own paper form
  3. You can write to your superannuation fund that you Intend to claim a tax deduction for your personal super contributions and provide then following information:
  • your first name
  • your family name
  • your date of birth
  • your fund name
  • your fund member account number
  • the financial year in which the personal contributions were made
  • the total amount of personal contributions made to the fund in that financial year
  • the amount of these personal contributions you intend to claim as a tax deduction
  • a declaration that you are lodging this notice by the due date
  • a statement that the information contained in your letter is true and correct
  • your signature
  • the date (day, month and year)
  1. You can complete an electronic form on your fund’s website (if your fund provides that).

When should I send the form to Superannuation fund?

Notice of intent to claim or vary a deduction to your superannuation fund must be sent by the earlier of the following:

Day you lodge your tax return for a particular financial year in which you made the personal contributions

Or

The end of the income year – following the one in which you made the contributions.

Where on my personal tax return can I claim this deduction?

This Deduction can be claimed at item D12 on your personal tax return.

D12 Personal superannuation contributions  

References:

[1] https://www.business.gov.au/news/2016/05/23/do-you-have-to-pay-super-for-yourself-as-a-sole-trader

[2] https://www.ato.gov.au/Individuals/Super/In-detail/Growing/Claiming-deductions-for-personal-super-contributions/?page=2#Are_you_eligible_to_claim_a_deduction_

[3] https://www.moneysmart.gov.au/superannuation-and-retirement/how-super-works/super-contributions/super-for-self-employed-people

[4] http://budget.gov.au/2016-17/content/glossies/tax_super/html/

[5] https://www.ato.gov.au/Individuals/Tax-Return/2016/Supplementary-tax-return/Deduction-questions-D11-D15/D12-Personal-superannuation-contributions-2016/