Superannuation is designed to help Australians save for retirement. One aspect that often interests people is the potential tax benefits of making contributions to their super fund.
Types of Super Contributions
There are two main types of contributions you might make to your super fund:
- Concessional contributions: These are before-tax contributions, such as employer contributions (including Super Guarantee) and personal contributions you claim as a tax deduction.
- Non-concessional contributions: These are after-tax contributions made from your take-home income. These are not tax deductible.
This article focuses on personal concessional contributions and their deductibility.
Claiming a Tax Deduction on Personal Super Contributions
If you make a personal contribution to your super fund, you may be able to claim it as a tax deduction, provided you meet certain ATO requirements. Some key conditions include:
- You must be under 75 years old (if you’re between 67 and 75, you must meet the work test or work test exemption).
- The contribution must be made to a complying super fund.
- You need to lodge a Notice of intent to claim or vary a deduction with your fund and receive written acknowledgement from them before you lodge your tax return.
Tax Treatment of Concessional Contributions
When you claim a deduction for a personal contribution, it’s treated as a concessional contribution. Concessional contributions are generally taxed at 15% within the fund, which may be lower than your marginal tax rate. However:
- If your total income including superannuation contributions is above a certain threshold (currently $250,000), Division 293 tax may apply, adding an extra 15% tax on some or all of your concessional contributions.
- There is an annual concessional contributions cap (currently $30,000 for 2025–26 financial year). Contributions over this cap may result in extra tax.
Why Tax Deductibility Matters
Claiming a deduction may reduce your taxable income for the year, which can lower the amount of income tax you pay. But there are also rules and limits that can affect whether the deduction is beneficial in your circumstances.
Record Keeping
To ensure you meet ATO requirements:
- Keep copies of your Notice of intent form and the fund’s acknowledgment.
- Keep contribution receipts and any related documentation.
Important Reminder
If you change super funds during the year, you must submit your Notice of intent to claim with your original fund before closing it. If you don’t, you will lose the ability to claim a deduction for contributions made to that fund.
This information is general in nature and based on current ATO guidelines. It doesn’t take into account your personal financial situation. You should seek professional advice from Hervey Bay Tax Solutions before making decisions about super contributions.