Superannuation is an excellent way of planning for your retirement income in a tax effective manner. There are a number of ways to boost your super including:
• Salary sacrifice
• Personal superannuation contributions
• Contribution redraws for first home buyers
• The government co-contribution scheme for low income earners
• A tax offset for contributions made on behalf of your spouse

In this blog post, we will focus on the recent changes to personal superannuation contributions.

Until 30 June 2017 superannuation contributions could only be claimed as a tax deduction by people earning at least 90% of their income from their own business. This really didn’t encourage people to plan for their retirement. If you were working part time and running your own business you wouldn’t have received a tax deduction for your contributions and this would significantly impact on your income in retirement. Thankfully, recent changes to the tax legislation have meant that many more people can claim tax deductions for contributions made into your superannuation.

From 1 July 2017 everyone is potentially eligible to claim a tax deduction for contributions made to their superannuation fund. From this current year, you can claim a tax deduction as long as you can meet the criteria. Most superannuation funds will be able to receive these contributions, but it’s worth making a phone call before you transfer the funds to ensure that your fund meets the ATO requirements.

As with all deductions, you must have actually incurred the expense in order to claim it. You can’t claim a deduction for contributions made by your employer, as your employer will claim that. You can only claim for the deductions you actually pay yourself.

It’s important to remember that there are some restrictions that you need to keep in mind. Generally, the claims will be limited to those aged between 18 and 65. If you are aged 65 to 74 you will need to have worked 40 hours within a 30 day period to be eligible. For those under 18, deductions will only be available if you are employed or running a business.

It’s not enough to just make the contributions. You must ensure that you advise your fund in writing that you will be claiming a tax deduction prior to the end of the financial year, so that you fund can correctly report this income in their own accounts. Your fund will send you a confirmation letter once this has been processed which we can use to claim the tax deduction in your personal tax return.

If you are planning to take advantage of the changes to the superannuation laws don’t leave it until the last minute. Many funds stop accepting contributions in the last few days of the financial year.

We are always available to have a chat with you about the various options and how they will impact on your tax position.
We are able to advise you of what the tax implications will be if you make superannuation contributions, but we cannot advise you on whether you should put additional funds into superannuation. We know some excellent financial planners and can refer you to them for financial planning advice.