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  • The effects of claiming a deduction

    Find out about the effects of claiming a deduction for your super contributions.

    Taxable income

    When you complete your tax return, your deductions reduce your taxable income and consequently reduce the amount of tax you need to pay.

    Treatment in the fund

    Personal super contributions you claim as a tax deduction are included in your fund's assessable income and are taxed at the rate of 15%. Your fund will withhold this amount from your super account.

    Government super payments

    If you claim a deduction for a personal contribution, you may be eligible for a low income superannuation tax offset on the tax paid on the contribution. You will not be eligible for a super co-contribution on the amount.

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    Contributions caps

    There is no limit on the amount you can claim as a deduction. However, there are caps on the amount of super contributions you can make before you pay extra tax.

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    Division 293

    If your income is more than $250,000 you may have to pay an additional 15% tax on your super contributions.

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    Income tests

    If you claim an income tax deduction for your personal contributions, the deductible personal contributions will count towards your reportable super contributions. As a result, the deduction will affect your income for the purpose of some tax offsets, deductions, concessions, the Medicare levy surcharge, and certain government benefits and obligations.

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    Example 4: Effects of claiming a deduction after 1 July 2017

    During 2017–18 Christie is employed as a fulltime hairdresser and earns $35,000 in assessable income. Christie is eligible to claim a deduction as she is not required to meet the 10% income test.

    Christie contributes $5,000 to her super fund as a personal contribution. If she wanted to claim an income tax deduction for the super contribution, she would give her fund a notice of intent form and receive an acknowledgment from her fund. Having done this, Christie could claim a tax deduction of $5,000, making her taxable income $30,000. However, her fund would pay 15% tax on the $5,000, so only $4,250 would be credited to Christie's super fund account. Additionally, Christie would be eligible for the low income superannuation tax offset, so the government would refund her offset into her super account. However, she would not be eligible for a super co-contribution.

    If Christie decided to claim a personal income tax deduction for $4,000 instead of the entire $5,000, this would mean:

    • her taxable income would be $31,000
    • her fund would have to pay 15% tax on the $4,000, so $3,400 would be credited to her account
    • she may be eligible for the super co-contribution, if she meets all other co-contribution eligibility requirements, in respect of the $1,000 that was not claimed as a deduction, in which case the government would pay her co-contribution entitlement into her super account
    • she would be eligible for the low income superannuation tax offset, so the government would refund her offset into her super account.
    End of example

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    Date

    Change type

    What's changed

    4 December 2018

    Minor editorial update

    Updated amounts in example 4 to correct an error.

    28 March 2017

    Minor editorial update

    Removed content in ‘are you eligible’ as it was not accurate.

    8 December 2016

    Expanded content

    Updates reflect draft regulations.

    5 December 2016

    Legislation

    Reflects superannuation reforms passed by Parliament on 23 November 2016.

      Last modified: 24 Oct 2018QC 20139