We all want to make the most of our tax returns each year. Did you know other than claiming the usual work-related expenses, specific super contributions may also be tax deductible?
If you’re looking at what deductions you might be able to claim this tax time, the good news is you can add after-tax super contributions to your tax deductions list.
If you’ve missed out this year, you could also use this as a guide on how to claim next year.
What super contributions can I claim a tax deduction on?
You can generally claim a tax deduction on voluntary contributions using after-tax dollars. This money may come from your take-home pay, savings, something you’ve sold (like a house or car) or an inheritance.
You can’t claim compulsory contributions an employer might pay you under the Super Guarantee, nor contributions you might make as part of a salary sacrifice arrangement with an employer.
Tax-deductible contributions may be particularly beneficial if you’re self-employed and don’t have an employer making before-tax contributions on your behalf.
What are the potential benefits?
Boost what you have in super, which could mean more money for your retirement.
Claim a tax deduction, which may mean you pay less in tax.
Further tax advantages might exist within the super system, including those on investment earnings.
How do I claim a tax deduction on super contributions?
To claim this tax time, you need to do the following things:
- Have made an after-tax contribution to your super either as a one-off or regular payment in 2022-23.
- Lodge a valid notice of intent form with your super fund before you lodge your tax return – or before the end of 2023-24 (if that’s earlier).
- Receive an acknowledgement from your fund in writing.
- Finalise your tax return using the contribution amount in your notice of intent.
Please see the ATO website for a complete summary of the rules for claiming tax deductions for personal super contributions.
Are there super contribution limits?
There are concessional and non-concessional contributions, and different caps apply to each.
The cap on concessional contributions, which tax-deductible contributions are one of, is currently $27,500 per financial year.
You may, however, be able to contribute more than this amount under what’s known as the carry-forward rule, which may allow you to accrue unused cap amounts for up to five years.
Other concessional contributions include compulsory contributions employers are required to pay and salary sacrifice contributions, which is an arrangement you might set up with your employer.
If you exceed contribution caps, additional tax and penalties may apply.
Do any age restrictions apply?
If you’re aged 67 to 74 and want to claim a tax deduction on any after-tax super contributions you’ve made, you’ll need to meet the work or work test exemption.
Under work test requirements, you must be gainfully employed for at least 40 hours over 30 consecutive days in the financial year the contributions are made.
This is an annual test, which means you can contribute for the entire financial year once you meet this test.
To be exempt from the work test, you need to have:
- met the work test in the financial year before you made the contribution
- have a total super balance below $300,000 at the end of the previous financial year
- not used the work test exemption during the last financial year.
Get the most out of your tax returns.
If you are interested in how after-tax super contributions can help you make the most of all available deductions or would like to discuss your tax return, please contact us at firstname.lastname@example.org or call 03 9674 3680.