From 1 July 2017, anyone who is eligible to make voluntary super contributions will also be eligible to make personal concessional (tax-deductible) contributions. This is a major change from the existing rules.

Under current rules, the ability to make personal concessional contributions is limited to people who:

• have not ‘done anything’ to be considered an employee as defined by Super Guarantee Administration Act 1992, or
• satisfy a 10% test which requires that less than 10% of their income is attributable to employment

This change is welcome news for employees, who will have the flexibility to make concessional contributions either via salary sacrifice (if allowed by their employer) or personal tax-deductible contributions. This flexibility could assist amongst other reasons with:

• end of year superannuation top ups by making personal concessional contributions
• to use up any remaining concessional contribution cap
• deciding how to contribute bonuses, annual leave and long service leave.

 What you can do after 1 July 2017

If you want to claim a tax deduction for personal super contributions, there are conditions to be met which include but are not limited to the following:

• You must have made the contributions to a complying super fund or a retirement savings account that is not:
  • A Commonwealth public sector superannuation scheme in which you have a defined benefit interest
  • A constitutionally protected fund (CPF) or other untaxed fund that would not include your contribution in its assessable income
  • A superannuation fund that notified the ATO before the start of the income year that they elected to either treat all member contributions to
    • The super fund as a non-deductible, or
    • The defined benefit interest within the fund as non-deductible.
  • You must meet the age restrictions (including satisfying the work test for those aged 65 to 74)
  • You must notify your fund in writing of the amount you intend to claim as a tax deduction within the required timeframe and using the ATO approved form
  • Your fund must acknowledge your notice of intent to claim a deduction in writing

 Case Study

Bill is employed as a production manager, and during 2017-18, earns $45,000 in salary and wages. Bill made personal (after-tax) super contributions of $3,000, notified his fund in writing using the ATO approved form that he intended to claim this amount as a tax deduction, and received an acknowledgement from the fund on the valid notice.

Bill meets all the other eligibility criteria and hence can claim a tax deduction for his personal super contributions of $3,000 in his 2017-18 tax return.

Credit: CommInsure