With the end of the financial year approaching fast, television, radio and digital advertising will be hitting you with an avalanche of “EOFY” campaigns. But before you donate to that charity to boost your tax deductions, why not consider donating to yourself by topping up your deductible superannuation contributions?
Making extra deductible superannuation contributions can provide significant tax advantages, while also going a long way to building a financially secure retirement.
So, what do you need to know leading into 30 June 2025?
1. Know Your Total Superannuation Balance (TSB) – You can find this on MyGov and it’s good to keep an eye on this – particularly if you have super with a several Funds. Your TSB is the total amount of all your combined superannuation interests. Your contribution cap may be different if your TSB is under $500,000.
2. Know Your Contribution Cap – the annual general concessional contribution cap (pre-tax contributions that either you, or your employer claim a tax deduction for) is $30,000. Again, be careful here if you have multiple funds – this cap applies across all superannuation Funds!
As mentioned above, if your TSB was under $500,000 at 30 June 2024 you may be able to contribute more than $30,000 by using some of last year’s cap that you didn’t use. Again, you can find this detail by looking up your superannuation details on MyGov.
- Salary Sacrifice – If your employer agrees, you may be able to arrange for a portion of your salary to be paid directly to your Super Fund. If this is not the case – never fear you can now make personal deductible contributions direct to your Super Fund
- Making Personal Deductible Contributions – you can simply make a deposit to your Fund and notify them that you intend to make a tax deduction on the deposit. Check with your Super Fund to obtain their payment instructions and deduction forms. Be aware of timing deadlines if you intend to claim the deduction in the 2025 financial year.
3. Employers – Check your Clearing House Deadlines - In order for superannuation to be deductible, it must be received as cleared monies by the Super Fund by 30 June 2025.
Be careful if you use a clearing house! Most clearing houses will require payment by Friday 20th June in order to guarantee they can pass on monies to the Super Fund by 30 June. Payment to the clearing house alone does not meet tax deductibility rules and we recommend that you confirm the timing with your clearing house now so you can plan for this.
Pitfalls to Be Aware Of
1. Not Claiming Deductions as Personal Contributions – In order to claim your extra super as a tax deduction:
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- the contribution must be received by your Super Fund prior to 30 June; and
- you must inform your Fund that you wish to claim a deduction for the contribution; and
- you must receive an acknowledgement from your Fund that they have treated your contribution as a deductible contribution. Your tax agent will need that acknowledgement from your Fund in order to claim the deduction on your individual tax return!
2. Late Payments – Don’t assume that you can simply transfer money on Monday 30th June! Check with your clearing house, or your Super Fund to ensure you meet their cut-off dates. Friday the 20th June is frequently being identified as the cut-off date, but double check with your Fund to make sure it’s not even earlier than this!!
3. Your Fund will Pay Tax – All concessional superannuation contributions attract 15% tax. You might be unaware of this as this tax is always paid by your Fund, but a thorough check of your annual member statement should confirm that for every $1 of concessional contributions the Fund shows a tax expense of 15 cents.
4. High Income Earners - Division 293 Taxes – likewise, if your assessable taxable income is likely to be over $250,000 your concessional superannuation contributions will be taxed at 30%. As noted above the Fund will remit the first 15% and you will have the choice of having the fund pay the additional 15% or paying it personally.
5. Over-Contributing Means More Tax – we recommend you triple check the year to date contributions that have been made to super by you and by our employer to know how much cap space you have before your make your contribution and claim your deduction. Going over your contribution cap will lead to increased personal income tax.
6. Know your Cash Flow – superannuation contributions are subject to “Preservation Rules” – You must know that these savings are not able to be accessed until you turn 60, at the earliest! While a tax deduction can be great, if it means you leave yourself short in terms of day to day cash flow needs, looking your money away until 60 might not be the best idea.
Saving for your future retirement is a great idea, but we definitely encourage you to make an informed decision. If you’d like more information or have any specific questions to help navigate the complex world of tax deductible superannuation contributions, please reach out to your local Roberts + Morrow Accounting and Financial Advisory team.
