Quick! You only have 2 weeks left to claim this super tax deduction
You can reduce your taxable income and boost your super balance at the same time - here's how.
If you've been thinking about adding some money into your super, you should do it now.
By making a personal, voluntary super contribution you can claim a tax deduction for it in your tax return this year.
This is a double win - because you not only reduce your taxable income for the financial year, but you're boosting your super balance at the same time.
You're able to make $30,000 worth of personal, concessional super contributions for the year, which includes the super guarantee paid by your employer.
Concessional super contributions are taxed at the reduced rate of 15% by your super fund, instead of your income tax rate which could be as high as 45% depending on what you earn.
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Let's look at some examples.
Let's say you earn $100,000 and add $10,000 into your super as a personal contribution.
That $10,000 would be taxed at 15% in your fund, versus 32% as part of your standard income outside of super (30% tax rate plus 2% Medicare levy).
So if you kept the money outside of super you'd pay $3,200 in tax on the $10,000, versus $1,500 within your super fund. That's a tax saving of $1,700.
The more you earn, the higher your tax rate, so the more you stand the benefit from this.
If your income for the year was $160,000, you'd have a net tax saving of $2,400 by making a $10,000 super contribution.
You'll also save more with a bigger super contribution.
So if you had some cash to invest, and you haven't maxed out your annual limit, it could be a smart move to add it to your super before you lodge your tax return this year.
How to make a tax-deductible super contribution
If you want to make a personal contribution into your super and plan to claim it as a tax deduction, make sure you do this well before 30 June.
Some super funds will have a deadline for personal contributions, which could be a few days or even a full week before the end of financial year.
Work out how much you're comfortable contributing and make the contribution via a simple bank transfer (you can do this within your fund's app or online portal).
Lastly, you need to tell your super fund you're planning to claim the contribution on tax by submitting a "Notice of intent to claim" form (you'll find this on your fund's website).
You need to send your fund the form and receive their confirmation before you can claim the contribution as a tax deduction in your tax return.
Ask a question
What about if your employer has made some contributions during the year, can you still add $30,000?
Hi James,
The $30,000 concessional contribution limiit included the super guarantee contributions made by your employer throughout the year. So for example if your employer has contributed $15,000, you can contribute another $15,000 yourself.
Thanks,
Alison