Did you know you can claim a tax deduction on certain super contributions when you do your tax return?
Whether you’re employed, self-employed, unemployed or retired, you might be eligible to claim a tax deduction on your after-tax super contributions.
How do I make a tax-deductible super contribution?
There are various ways to make an after-tax super contribution, including using money from your salary, savings, or the proceeds from an asset sale. When you contribute these funds to your super, you can claim a tax deduction on the amount when you do your annual tax return.
What are some of the benefits?
Putting money into super and claiming it as a tax deduction may be beneficial if you receive extra income that would otherwise attract personal income tax (as this is often higher).
Similarly, if you’ve sold an asset subject to capital gains tax, you may contribute some or all of that money and claim it as a deduction. This could reduce or even eliminate the capital gains tax owed.
What do I need to do to claim a tax deduction on a super contribution?
Make an after-tax contribution to your super
While you can contribute any amount, concessional contributions are capped at $27,500 per financial year. In some cases, you can make catch-up concessional contributions, but it’s important to check because if you exceed the cap, additional tax may apply.
If you’re an AMP super customer, you can set up notifications in My AMP that alert you as the annual limit approaches.
Lodge a form with your super fund
The next step is to lodge a notice of intent form with your super fund, which will acknowledge receipt in writing. If you’re an AMP customer, log into My AMP and select the account you’ve contributed to.
Importantly, you shouldn’t make any withdrawals, rollovers or transfers to pension before your notice of intent form has been lodged, as this may reduce or invalidate the tax deduction.
Have the paperwork ready when you do your tax return
Once the financial year ends, you can prepare and lodge your tax return using the written acknowledgement from your super fund.
Are there other things that I should keep in mind?
Recent changes to super have removed the need to meet a ‘work test’ before making a personal contribution or under a salary sacrifice arrangement. However, if you are 67-74, you must meet the ‘work test’ to claim a deduction on personal super contributions.
The ‘work test’ requirements state that you must be employed or self-employed for 40 hours over 30 consecutive days in the financial year where contributions are made or meet the work test exemption rules.
For the work test exemption, you must meet three conditions:
- You met the work test in the financial year before contributing.
- Your total super balance is less than $300,000 at the end of the previous financial year.
- You did not use the work test exemption in a previous financial year.
If you’re claiming a deduction for an after-tax super contribution, the contribution will count towards your concessional contributions cap ($27,500 per year). Note that you may be eligible to contribute more if you have unused concessional contributions from previous financial years.
Importantly, other contributions also count towards the concessional contributions cap, including:
Find out more about super contribution types, limits and benefits.
Other contribution incentives
After-tax super contributions that you claim a tax deduction for won’t be eligible for a super co-contribution from the government.
When you can access super
The Government sets rules around when you can access your super. Generally, you won’t be able to access this money until you’ve reached your preservation age and retired.
Super returns aren’t guaranteed
The value of your investment in super can fluctuate. Before making extra contributions, make sure you understand the risks.
Where can I go for more information?
Find out about other ways you can contribute into super.
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Any advice and information is provided by AWM Services Pty Ltd ABN 15 139 353 496, AFSL No. 366121 (AWM Services) and is general in nature. It hasn’t taken your financial or personal circumstances into account. Taxation issues are complex. You should seek professional advice before deciding to act on any information in this article.
It’s important to consider your particular circumstances and read the relevant product disclosure statement, Target Market Determinationor terms and conditions, available from AMP at amp.com.au, or by calling 131 267, before deciding what’s right for you.
The super coach session is a super health check and is provided by AWM Services. It is general advice conversation only. It does not consider your personal circumstances.
You can read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you. You can also ask us for a hardcopy. All information on this website is subject to change without notice. AWM Services is part of the AMP group.