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  • Super for the self-employed

    If you’re self-employed, you can put money into your super fund to save for retirement. These payments are called personal super contributions and you may be eligible to claim them as a tax deduction.

    For the 2016–17 and earlier financial years if more than 10% of your income is salary or wages from an employer, you won’t be eligible for a tax deduction.

    If you're eligible to claim a tax deduction for your personal super contributions, only the amount we allow as a deduction will count towards your concessional contributions cap.

    Next steps:

    • If you're eligible and want to claim a tax deduction, you need to complete a notice of intent to claim a deduction form. You can get this from your super fund or our website.
    • Once you complete the form, send it to your fund. Make sure you get an acknowledgment from them.
    • You must do this before you lodge your tax return for the relevant year. Then you can claim a tax deduction for the payments you made as part of your tax return.

    Note: Most self-employed people can claim a deduction for contributions they make until they are 75 years old.

    Tips to help avoid exceeding the non-concessional cap

    • Be aware of your non-concessional contributions cap.
    • Keep track of the amount of contributions and when they were received by your super fund – contributions count towards a cap in the year your super fund actually receives the money.
    • If you go over the concessional (before-tax) contributions cap, excess contributions count towards your non-concessional (after-tax) contributions cap if you choose not to release the excess concessional contributions from your super fund.
    • Any amount you withdraw and re-contribute to your super fund is a personal (after tax) contribution.
    • You're only eligible to bring forward the next two years of contributions if you are 64 years old or under on 1 July of the first financial year and from 1 July 2017 your total superannuation balance is less than $1.4 million
      • if your total super balance is $1.4 million or above and below $1.5 million you can bring forward only one year of contributions.
    • If someone else, such as a financial planner, accountant or employer, makes contributions on your behalf, check that they make the contributions in time to be received in your fund account by the end of the financial year.
    • If you make contributions by BPAY®, internet transfer or similar means at the end of the financial year, check the terms and conditions of your financial institution and allow for any possible delays.
    • Check if your contributions are held in another account or by another institution before they are received by your fund, as this can cause delays.

    If you go over the concessional contributions cap

    For 2013–14 onwards, excess concessional contributions are no longer subject to excess contributions tax. If your contributions exceed the cap, the amount is included in your assessable income and taxed at your marginal tax rate, rather than the excess concessional contributions tax rate of 31.5%.

    To work out if you have gone over the concessional contributions cap, we look at your date of birth and assess the information:

    • reported to us by your super fund
    • you report in your tax return.

    You have to pay the excess concessional contributions charge on the increase in your tax liability. This charge is applied to recognise the tax on excess concessional contributions is collected later than normal income tax.

    To reduce your tax liability, we will apply a 15% tax offset to account for the contributions tax already been paid by your super fund.

    You may elect to withdraw up to 85% of your excess concessional contributions from your super fund to help pay your income tax assessment when you have excess concessional contributions.

    Any excess concessional contributions withdrawn from your fund no longer count towards your non-concessional contributions cap.

    Including excess concessional contributions in your assessable income may impact your pay as you go (PAYG) instalments, or could lead to you entering the PAYG instalment system. For more information, refer to PAYG instalments.

    If you have excess concessional contributions reported to us after you lodged your tax return, we will amend your tax return to include the excess concessional contributions. We will send you an income tax notice of amended assessment, an excess concessional contributions determination and a fact sheet.

    If you wish to release an amount of your excess concessional contributions, you need to complete the excess concessional contributions election form and send it to us. We then issue your fund with a release authority.

    Example: Excess concessional contributions

    Mary is 51 years old. During 2013–14, Mary salary sacrificed money to super. Her total concessional contributions were $35,000.

    Mary's concessional cap is $25,000, so her excess concessional contributions total is $10,000.

    Mary lodges her tax return, and has taxable income of $70,000. We include the $10,000 of excess concessional contributions, which increases Mary's taxable income to $80,000. Mary is assessed at her effective marginal tax rate of 34% (including 1.5% Medicare levy).

    The additional tax payable as a result of the excess concessional contributions is $3,400.

    Mary is entitled to a tax offset equal to 15% of her excess concessional contributions, decreasing her tax liability by $1,500.

    Including the excess concessional contributions, Mary's tax liability has increased by $1,900 ($3,400 less $1,500), and the excess concessional contributions charge is applied to this amount.

    Mary doesn’t have to do anything – we will notify her by sending:

    • an income tax notice of assessment
    • an excess concessional contributions determination.

    Mary has 21 days to pay her account. She decides to withdraw some of her excess concessional contributions from one of her super funds to help pay her tax debt.

    Mary completes the excess concessional contributions election form and decides to release the full amount of $8,500.

    She sends the election form to us and we issue a release authority to Mary's nominated fund to have the money released to us.

    When we receive the money, we offset the amount against any debts Mary has, before refunding her the balance.

    End of example

    See also:

    Excess concessional contributions charge

    From 1 July 2013, the excess concessional contributions charge is applied to the additional income tax liability arising from having excess concessional contributions included in your tax return.

    The intent of the excess concessional contributions charge is to acknowledge the tax is collected later than normal income tax. The charge is payable for the year a person makes excess concessional contributions.

    If you don't pay the excess concessional contributions charge by the due date, general interest charge (GIC) may apply.

    The excess concessional contributions charge period is calculated from the start of the financial year the excess concessional contributions were made, and ends the day before the tax is due to be paid under your first assessment for the year that includes excess concessional contributions.

    See also:

      Last modified: 09 Sep 2019QC 19749