Pay less tax this financial year — claim a tax-deduction on your after-tax super contributions
4 June 2020
We’re quickly coming up to the end of the financial year, which means it’s once again time to think about everything money.
And this year, you can take advantage of a relatively new tax deduction that not only reduces your taxable income but can boost your super balance.
Previously only available to people in select employment situations (such as being self-employed), personal tax-deductible contributions let you claim a deduction on eligible after-tax super contributions.
Making the most of extra contributions this tax time
With this deduction, your after-tax contributions are taxed at only 15% if you earn under $250,000 a year, or 30% if you earn $250,000 or more a year. For most people this will be much lower than your marginal income tax rate.
It also means you will pay the same amount of tax on personal after-tax contributions as you would for before-tax contributions, such as salary sacrifice amounts.
Claiming a tax deduction on personal after-tax contributions can be particularly useful if you deposit extra money into your super that you would usually pay tax on at your full marginal tax rate, such as a work bonus or unexpected windfall.
Contribution caps are Government-mandated limits on the amount of money you can contribute to super each year.
The concessional contributions cap includes all contributions made by your employer — including salary sacrifice– and any personal after-tax contributions claimed as a tax deduction. The concessional contributions cap for this financial year is $25,000 regardless of your age.
If you would like to claim your personal after-tax contributions on your tax return, you need to ensure that all payments made by your employer to your super account and your extra contributions do not exceed $25,000. This cap applies to all your super accounts added together, not each individual account if you have more than one.
Contributions above $25,000 fall into the non-concessional cap and cannot be claimed as a tax deduction.
How to claim personal after-tax contributions as a tax deduction
To claim a tax deduction on your personal after-tax super contributions:
Step 1 – see how much you can contribute before you exceed the concessional cap
Log into the Member SuperSite to see your total contributions for the financial year to your MTAA Super account. Do the same for any other super funds you have received contributions for this financial year.
Calculate any remaining contributions you have for the rest of the financial year, both compulsory and voluntary. ASIC’s employer contributions calculator can help you work out how much you should receive in compulsory contributions from your employer.
Deduct your contributions to date and any remaining contributions from the concessional contribution limit of $25,000. This is the maximum you can contribute and claim as a tax deduction.
For example, if your employer has contributed $5,000 to your super and you have contributed an additional $1,500 in salary sacrifice, your total concessional contributions for the financial year is $6,500. This means you can contribute up to another $18,500 before you reach the concessional contributions cap of $25,000.
Step 2 – make your contribution
Make a direct payment to MTAA Super via BPAY or EFT. For details, login to your account via Member SuperSite. To ensure that your funds arrive before the end of the financial year, make your payment by 24 June 2020.
Step 3 – submit your notice of intent to claim a tax deduction
Your notice of intent to claim a tax deduction must be submitted by the earlier of:
the day you lodge your tax return for the year you made the contribution, or
the end of the financial year following the financial year in which you made the contribution
Once we receive your notice of intent, we will send you an acknowledgement.
Step 4 – lodge your tax return and claim your deduction
When you complete your tax return, you can claim a deduction for the contribution stated in our acknowledgement of your notice of intent. For more information about how to make your claim, visit the Australian Taxation Office website.
To learn more about making extra contributions, you can meet face-to-face with one of our dedicated Superannuation Advisers or talk to our Financial Education and Advice Team on 1300 362 415.
As a member of MTAA Super, general advice is available to you at no additional cost — it’s all covered by your MTAA Super administration fees. So, get in touch. We’re here to help.
General Advice Warning
This information on this website is provided by Motor Trades Association of Australia Superannuation Fund Pty Ltd (ABN 14 008 650 628, AFSL 238 718) of Level 3, 39 Brisbane Avenue BARTON ACT 2600, Trustee of the MTAA Superannuation Fund (ABN 74 559 365 913). Motor Trades Association of Australia Superannuation Fund Pty Ltd has ownership interests in Industry Super Holdings Pty Ltd and Members Equity Bank Limited (ABN 56 070 88 7 679).
The information contained in this website is correct at the time of publishing. It is of a general nature and does not take into account your objectives, financial situation or needs. Before acting on any of the information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. If you are considering acquiring or continuing to hold a particular financial product, you should obtain the Product Disclosure Statement relating to the product and consider it before making any decision. The MTAA Super Product Disclosure Statement is available on this website, or by telephoning the Customer Service Centre on 1300 362 415.
MTAA Super recommends that potential investors seek independent financial and taxation advice before making any investment decisions so as to determine whether an investment is appropriate, given the investor’s investment objectives, financial position and needs.
Note: Superannuation Advisers are employees and authorised representatives of Motor Trades Association of Australia Superannuation Fund Pty. Limited ABN 14 008 650 628, AFSL 238 718 (Trustee). The Trustee will be responsible for any General Advice about superannuation provided by the Superannuation Advisers. Superannuation Advisers are also authorised representatives of Link Advice Pty Ltd (ABN 36 105 811 836 AFSL 258 145). Link Advice will be responsible for any Personal Advice provided by the Superannuation Advisers. Advisers in the Financial Education and Advice Team (FEAT) are employed by Link Advice Pty Ltd (ABN 36 105 811 836 AFSL 258 145). Link Advice will be responsible for all General and Personal Advice provided by advisers in the FEAT team.