News & Information

Changes to Personal Super Contributions Deductions

March 09, 2018

The onset of the new 2017-18 financial year saw a lot of changes to the legislation surrounding superannuation and in particular, changes to personal super contributions deductions.

In the 2016-17 financial year, the ability to claim a tax deduction on personal super contributions made (which does not include salary sacrifice or compulsory super guarantee payments made by an employer) was limited to individuals who were mainly self-employed.  These individuals were able to claim a tax deduction on personal super contributions they made if less than 10% of their income came from salary and wages.  This condition is known as the 10% maximum earning condition. However, as of 1 July 2017, the government removed the 10% maximum earning condition, which means that individuals under the age of 75 can now claim a tax deduction on their personal super contributions made granted eligibility requirements are met.

So what are the eligibility requirements?

In order to claim a tax deduction on your personal super contribution you must first meet the following eligibility rules:

  • You must have made a contribution on or after 1 July 2017 to a complying super fund or a retirement savings account.
    • It is important to bear in mind that if you are a member of a Commonwealth public sector superannuation, a fund that offers a defined benefit or an untaxed fund you will not be eligible to claim a tax deduction.
  • You must meet age restrictions:
    • If you are under 18 years of age you can claim a tax deduction for the year you made your personal contribution only if your income came from gainful employment or if you earned your income as a business operator.
    • If you are aged between 65-74 at the end of the financial year in which you made your contribution, you must satisfy the work test to be able to contribute and to also claim a deduction.In order to satisfy the work you much have worked a minimum of 40 hours in a 30-day consecutive period.You will need to satisfy the work test each year you wish to make a personal super contribution.
    • If you are 75 years or older and you want to claim a tax deduction you are only eligible if the contribution was made on or before the 28th day of the month which follows the month in which you turn 75.
  • You must notify the super fund in writing the amount you wish to claim as a deduction, this is known as a “notice of intent”.Most super funds will send out a notice of intent if you are eligible to claim a deduction for personal contributions.If you believe you are eligible and have not received anything in writing it is always best to follow up with the fund to confirm your eligibility and the next course of action.Notice of intent to claim forms are available to download from the ATO’s website. However, you must first receive an from your super fund to be able to proceed.
  • Lastly, the fund must acknowledge, in writing, your notice of intent to claim a deduction.

If you have made a personal super contribution on or after 1 July 2017 or plan to make a personal super contribution be sure that you meet the eligibility requirements to ensure you are able to claim a deduction.

LifeTime Financial Group are specialist (holding appropriate accreditations) advisors who are ideally positioned to assist you.

Would you like to discuss your personal position further with one of our highly qualified financial planners? Why not call us today on 03 9596-7733. There is no cost or obligation for our initial conversation/meeting.

Written by Anthony Stedman of LifeTime Financial Group. A leading privately owned Melbourne based Financial Planning practice.