What makes up this $27,500 tax-deductible cap amount?

One of the key benefits of superannuation is that you can claim a tax deduction for contributions up to a maximum tax-deductible cap of $27,500 per annum. However, it is crucial to understand that the contributions must be received by the fund by 30 June to allow you to claim the tax deduction. This includes employer contributions when you are self-employed via your own company. Contributions, whether via SuperStream, BPay, or Direct Credit EFT, need to be paid well before 30 June to ensure they are receipted by the last working day of the financial year, which this year is 28 June.

Employers need to remember that some SuperStream contributions for their employees, and possibly themselves, can take up to 10 days from when they leave their bank account until they are received by the superannuation fund.

To make the most of this tax-deductible cap amount, you need to understand what constitutes this amount on your behalf. It includes employer contributions, currently 11% of gross salary, plus salary sacrifice contributions, and any additional contributions you wish to personally contribute and claim as a tax deduction in your end-of-year tax return. You need to check what contributions your employer has already made on your behalf and what contributions might still be paid on your behalf in June.

Any level of additional contribution provides you with a long-term benefit, but it is important to ensure you don’t exceed the $27,500 cap for tax purposes. Contributions above this amount can still be made to superannuation but will not be treated as a tax deduction and will be treated as non-concessional contributions.

Can I ever contribute more than $27,500 and still claim a tax deduction on all of it?

Yes, current legislation allows for catch-up contributions to be made to superannuation based on the previous five financial years where you may not have used up the maximum concessional cap amount. Your current level of unused concessional contributions can be checked via MyGov or through your tax accountant. This may allow you to use these catch-up contributions to claim a much larger deduction than $27,500.

You can only use catch-up contributions if you have a total superannuation balance of less than $500,000 at the start of the current financial year.

Apart from making the contribution to my superannuation account well before 30 June, is there anything else I need to do to claim a tax deduction?

Yes, you need to complete a Notice of Intent to Claim a Tax Deduction, which is lodged with your superannuation fund. This must be lodged and acknowledged by the fund before you submit your tax return for that year.

What might stop me from being able to claim a tax deduction?

If you have already rolled money from superannuation accumulation phase to pension drawdown phase, this can prevent you from claiming the deduction if the funds have already left the account where you paid the contributions. Therefore, the Notice of Intent needs to be lodged with the fund before any rollovers are completed.

But my employer only pays my superannuation that I am owed in July! Is that OK?

Under superannuation guarantee legislation, your employer only needs to pay the employer superannuation owed to you from 1 April to 30 June by 28 July. If this is done, they are meeting their employer superannuation guarantee requirements. However, the contribution they make after 1 July is then claimed by them as a tax deduction in the next financial year.