Can I claim a tax deduction for making a contribution into superannuation?

By September 25, 2017September 7th, 2018Superannuation, Tax


Prior to 1 July 2017 the rules around claiming a personal tax deduction for contributions made into superannuation were really just limited to self-employed folk running a sole trader or freelancing business.

However, recent changes mean that most people are now eligible to make a superannuation contribution and claim a tax deduction for it. This can yield significant tax savings whilst boosting retirement savings at the same time.

Tax savings?

Income of a superannuation fund, whilst in accumulation phase (i.e. whilst you’re still working and making contributions), is taxed at 15% which is way less than the current top marginal personal tax rate of 49%. The difference in tax rates is the saving you’ll make – sure, the funds will be tied up in super, but for many people this is a very effective way of maximising retirement savings.

Who is eligible?

Anyone aged between 18 and 75 who is able to make a contribution into a complying superannuation fund. By ‘complying’ it means most funds, but there are a few limited types of funds that aren’t eligible – see here for more info. And please note that anyone between 65 and 74 years of age will need to meet a work test. This test is applicable once you turn 65 years old until you turn 75 years old, whereby you must have worked at least 40 hours within 30 consecutive days in the relevant financial year.

For anyone self-employed they will still be able to make contributions as per usual. Same deal for anyone salary-sacrificing into superannuation from their pre-tax wages. No changes here.

One final thing to note, for anyone intending to claim a personal tax deduction for contributions made into superannuation you need to notify your super fund in writing prior to making the deposit. So if you want to make a contribution you’d best give your super fund a call and ask them what the proper procedure is so that you don’t miss out on claiming the deduction due to a paperwork fail.

If you’d like to have a chat with one of our superannuation experts about your retirement savings, or anything else to do with your personal or business tax affairs, why not get in touch? We’d love to help.