Last year’s changes to super opened things up for anyone wishing to claim tax deductions for personal contributions. But you’ll need to make the contribution by 30 June 2018 if you’re going to make a claim.
The maximum amount of deductible super contributions that can be made for you without penalty is limited to $25,000. This includes amounts your employer makes to super, including super guarantee and salary sacrifice contributions, as well as super contributions that you have claimed as a tax deduction.
If you’re going to make a deductible contribution, the first thing is to make a personal contribution to super by 30 June 2018. Contact your fund or have a look on the fund’s website to find out how to do it. If you have a self-managed superannuation fund, then it’s probably just a matter of making a transfer of the money to the fund’s bank account.
The next thing to do is make an election to claim the deduction. This should be done by the earlier of the time your tax return is lodged with the ATO or the end of the next financial year (30 June 2019 for contributions you have made for the 2017/18 financial year) otherwise you won’t be able to make a claim. Also, you won’t be eligible for a tax deduction if your election is received by the fund after you have commenced a pension with the relevant contribution or you have withdrawn/rolled over your super from the fund that received your contribution. This shows you how important timing is to make the election and claim the deduction.
There are three ways in which you can make the election to claim the deduction. Your fund may have an election form for you to complete, the ATO has a form on its website you can complete and send to the fund or you can send the required details to the fund in an email or letter. Have a look on your fund’s website, search the ATO website under ‘Claiming deductions for personal super deductions’ or get writing to let the fund know what you wish to do.
After you have sent the election to the fund, the trustee is required to acknowledge receipt of your election. That’s the signal you can now claim a tax deduction for the contribution in your election.
But, what happens if you have claimed too much. If you haven’t lodged a tax return or done any of the things that will treat your election as invalid, it is possible for you to send an amended election to your fund notifying them of a decrease in the amount claimed in your election. However, if you are not able to do this then you may end up being liable for excess concessional contributions tax which taxes the excess at your personal tax rate plus an interest rate penalty.
So, if you intend to make a tax deduction for super contributions you better get into action and make the contribution to your fund by 30 June, which is not that far away. After that, you will have some time to make the election for your claim, but you need to know the rules if you are intending to rollover to another fund or start a pension or delay sending your tax return to the ATO. Then there’s the amount you are going to claim – make sure all the deductible contributions that are made to your super are no more than $25,000.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.