Claiming a tax deduction for personal contributions
While employers make contributions for most of their employees, some people can only grow their super through personal contributions. Accordingly, a tax deduction is generally available to eligible people who make personal contributions to their super fund.
Who is eligible for a tax deduction?
To claim a personal tax deduction, you must fit in one of the following categories:
- Fully self-employed (ie a sole trader, not a company director) and not under a contract principally for labour
- Less than 10% of your total assessable income comes from an employer
- Employed but not eligible for the superannuation guarantee (SG) such as
- If under 18
- If earning less than $450 a calendar month
- Doing work exempt from SG (eg domestic duties)
From 1 July 2017, the 10% rule will cease so that most Australians will be able to claim a tax deduction for personal contributions (this excludes defined benefit and CSS members).
How do you claim a tax deduction?
It is not difficult to claim a deduction but you must follow the steps in the correct order – you can’t claim a deduction unless you notify your super fund first.
- Notify AvSuper of your intent, using the Australian Tax Office’s (ATO) intent to claim or vary a deduction for personal contributions form
- Get acknowledgement letter from AvSuper
- Complete tax return
Important details about making a claim
- If you give us an invalid form, we will return it to you and you will need to send us a new form before getting an acknowledgment to use in your tax return.
- Give us your intent to claim form before submitting your tax return to the ATO
- Lodge your intent within 12 months of the end of the relevant financial year. That is, to claim for 2016-17, give us your form before 30 June 2018.
- You can only claim as much as you have personally contributed in that financial year
- You can only claim money already contributed to your fund – so if you give us your form in March 2017, contributions made in April or May 2017 can’t be claimed as tax deductions
- If you want to claim more than you had previously told us, and you have not yet submitted your tax return for that financial year, you can submit a second intent to claim a tax deduction for personal contributions form with the additional amount. This is not considered a variation so tick ‘no, this is not a variation of a previous claim’ and do not include any amounts covered by a previous valid notice for the year. So if you originally intended to claim $10,000 but now want to claim $15,000, your second form will indicate a claim amount of $5,000. You will receive two acknowledgment letters, totalling $15,000.
- If you want to reduce the amount you intend to claim, use the ATO’s intent to claim or vary a deduction for personal contributions form within the required times. Tick ‘yes’ this is a variation of a previous intent to claim form and the second form will replace the first.
- Some limits may apply so the ATO may disallow part or all of your claim. If they disallow part of your claim, you can vary your intent to claim so we only record the reduced amount as a concessional contribution. In this case, you can give us the variation form after you have lodged your tax return.
What else do I need to know?
- Please lodge the ATO intent to claim or vary a deduction for personal contributions form before moving the money from your account (including rolling it into an income stream) as a tax deduction can be not applied to money already moved.
- You cannot vary a previous notice to claim a tax deduction if you have withdrawn the money from AvSuper (including rolling it into an AvSuper income stream) or are no longer an AvSuper member.
- You cannot claim a tax deduction for any contributions you have split with your spouse.
- Once contributions are claimed as a tax deduction, they are counted as concessional contributions which means we tax them at 15% and they don’t count towards a co-contribution
- It can be a complex decision as you consider the potential advantages of a tax deduction versus your concessional contributions limit (and associated additional taxes, if applicable) and the loss of any co-contribution entitlement. Remember you do not have to claim all of your personal contributions from a financial year
Email: email@example.com | Freecall: 1800 805 088 | Phone: 02 6268 5073 | www.avsuper.com.au
This information is of a general nature only and does not take into account your personal objectives, situation or needs. Before making a decision about AvSuper, you should consider your own requirements and the relevant Product Disclosure Statement (PDS). For a copy call us or visit the AvSuper website, www.avsuper.com.au. AvSuper Pty Ltd (ABN 46 050 431 797, AFSL 239078) is the Trustee of the AvSuper Fund (ABN 84 421 446 069). FS2010.3 02.2017