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  • Claiming deductions

    You can claim a tax deduction for salary sacrifice contributions for your employees if:

    • the contributions are made under an effective salary sacrifice arrangement
    • the contributions are made to a complying super fund
    • the employee is under 75 years old. There are some circumstances where you can claim a deduction for older employees.

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    When to pay contributions to claim a deduction

    You can only claim a deduction for salary sacrifice contribution in the financial year that the super fund receives it.

    Example: Contribution paid after end of financial year

    Pieter starts work on 1 July 2018. Each month, Pieter's employer makes contributions of $1,200 into his super fund. They make the contribution by the 28th day after the month that the contributions relate to, for example, they pay the August contribution by 28 September.

    At the end of the 2018–19 financial year, Pieter's employer can claim a deduction of $13,200 for the 11 monthly contributions they made during the financial year. As the contribution for June 2019 was made on 28 July 2019, the deduction for this contribution is claimed at the end of the 2019–20 financial year (the year in which it was made).

    End of example

    If you use the Small Business Superannuation Clearing House (SBSCH), super guarantee payments are taken to be received by the super fund the same day that payment is received by the SBSCH.

    However, for salary-sacrifice contributions processed by the SBSCH, if you wish to claim a deduction for contributions in a particular financial year, you need to make sure the payment is received by the super fund before the end of that financial year.

    Example: Contribution paid through the SBSCH

    Sally's employer sends a super contribution of $1,425 to the SBSCH on 30 June. Sally's super fund doesn't receive the contribution from the clearing house until 3 July. Sally's employer can't claim an income tax deduction for the $1,425 in the year it paid the contribution to the clearing house. However, the employer can claim the deduction in the next financial year (the year the contribution arrived).

    End of example

    Employees 75 years or older

    Super guarantee contributions paid by the quarterly due date are deductible in the financial year they are received by the super fund. So are mandatory contributions under an industrial award or determination, or a notional agreement that preserves a state award.

    Other non-mandatory employer contributions are deductible only if they are paid within 28 days of the end of the month in which the employee turned 75.

    Contributions after that are not deductible.

    Contributions for an employee's spouse

    Contributions made for your employee's spouse are not deductible.

    Contributions made to an employee's spouse's super fund will be a taxable fringe benefit. This means:

    • you will need to pay fringe benefits tax on the amount
    • your employee's payment summary will need to include the amount as a reportable fringe benefit.

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      Last modified: 27 Feb 2020QC 17235