A personal deductible super contribution is a voluntary contribution made by an individual to their superannuation fund from their after-tax income, which they can later claim as a tax deduction on their tax return. This type of contribution can help reduce the individual’s taxable income, potentially lowering their overall tax liability while simultaneously boosting their retirement savings.
- To claim a tax deduction for personal super contributions, SMSF members must:
- Complete a Notice of Intent to Claim or Vary a Deduction for Personal Super Contributions.
- Ensure the fund trustee acknowledges receipt of the valid notice in writing.
- Important steps for members:
- Receive the written acknowledgment from their fund before claiming the deduction on their tax return.
- Secure the acknowledgment for any deduction notice before initiating a rollover or closing their super account.
- Key points to remember:
- Submitting a notice of intent after rolling over super interest to another fund (closing the account) or withdrawing super interest (paid out as a lump sum) will render the notice invalid.
- An invalid notice means the member cannot claim a deduction for contributions made before the rollover or withdrawal.
When making personal deductible contributions, you need to maintain your concessional contributions cap. This cap is the maximum amount of before-tax contributions you can contribute to your superannuation each year without incurring extra tax. It includes Super Guarantee payments made by your employer and any amounts you have salary sacrificed into your super.
- From 1 July 2024, the concessional contributions cap is $30,000.
- From 1 July 2021 to 30 June 2024, the concessional contributions cap was $27,500 per year.
- From 1 July 2017 to 30 June 2021, the concessional contributions cap was $25,000 per year.
The cap increases in increments of $2,500, in line with the statistical measure of average weekly ordinary time earnings (AWOTE).
If you have unused cap amounts from previous years, you may be able to carry them forward to increase your contribution caps in later years. To be eligible for carrying forward unused cap amounts, you must:
- Have a total super balance of less than $500,000 as of 30 June of the previous financial year.
- Have unused concessional contributions cap amounts from up to 5 previous years.
The carry-forward provision allows you to use unused cap amounts from up to 5 previous financial years, starting from 2018–19. These unused cap amounts expire after 5 years. For example, an unused cap amount from 2019–20 will expire at the end of 2024–25 if not used.
The oldest available unused cap amounts are carried forward first. For instance, unused cap amounts from 2019–20 are applied before those from 2020–21.
Unused concessional cap amounts are automatically applied if you exceed the cap in any given year. If you still exceed the concessional contributions cap after applying the carry-forward amounts, you may need to pay extra tax.
You can check your available carry-forward contribution amounts through ATO online services by selecting Super, then Information, and then Carry forward concessional contributions.
For more information visit ATO website
