Prior to 1 July 2017 an individual could (under certain conditions), claim a deduction for personal super contributions. One of those conditions is the “10% test” – less than 10% of their income was scoured from wages or salary.
This meant that predominately only self-employed taxpayers were eligible to claim a deduction for any personal super contributions they made.
From 1 July 2017, the 10% test has been removed. This means most working people under 75 years of age can now claim a tax deduction for their personal super contributions.
From 1 July 2017 you will be eligible to claim a deduction for personal super contributions if you meet the following conditions:
1) You made the contribution to a complying super fund or a retirement savings account:
Any super contribution to a Commonwealth public sector superannuation scheme in which you have a defined benefit, will not be eligible.
2) You meet the age restrictions:
If you are aged 75 years or older, you can only claim a deduction for contributions you made before the 28th day of the month following the month in which you turned 75. If you are under 18 years old at the end of the income year in which you made the contribution, you can only claim a deduction for your personal super contributions if you also earned income as an employee or a business operator during the year. If you are aged 65 to 74 you need satisfy a work test in the financial year in which the contribution is made. To satisfy the work test you must work at least 40 hours during a consecutive 30-day period during the financial year.
3) You have given your fund a Notice of intent to claim or vary a deduction for personal contributions form:
Eligible taxpayers will need to notify their fund in writing of the amount they intend to claim as a deduction and their fund must then provide a written acknowledgement of their notice of intent to claim a deduction. This all needs to be done prior to the lodgement of the tax return in which the deduction is claimed.
The personal super contributions that you claim as a deduction will count towards your concessional contributions cap, which for the 2017-2018 year is $25,000. When deciding whether to claim a deduction for super contributions you should consider the superannuation impacts that may arise from this. If you exceed your cap you will have to pay additional tax and any excess concessional contributions will count towards your non-concessional contributions cap.