Members* under the age of 75** who made personal contributions to their super fund in 2019-20 can potentially claim a tax deduction for those contributions for the 2019-20 tax year.
Personal deductible contributions count towards an individual’s CC cap. The basic CC cap is $25,000 for 2019-20 but the member may have a higher personal concessional contribution cap available if the member is eligible to carry forward any unused concessional contribution cap from 2018-19 and has a total super balance on 30 June 2019 less than $500,000.
The following strategies may assist in maximising CCs by making personal deductible contributions:
• Review the amount of employer contributions (e.g. Super Guarantee and salary sacrifice contributions) and make personal
deductible contributions up to the member’s personal concessional contributions cap before the financial year ends.
• If a member receives a lump sum bonus or leave payment that represents entitlements that they have already earned,
they generally cannot salary sacrifice the amount to super. However, they can instead make a personal deductible
contribution up to their remaining CC cap to reduce their taxable income.
• Where an employer does not offer an employee the option to salary sacrifice employment income, an employee can make
a personal deductible contribution before the end of the financial year, within their remaining CC cap, to achieve the same
tax effective outcome.
Considerations:
• It is important to note that in order to claim a tax deduction, the member must lodge a valid Notice of intent to claim a
deduction form with their super fund which is acknowledged in writing before the earlier of:
• the day the taxpayer lodges their income tax return for the income year in which the contribution was made, or
• the end of the next income year following the year of the contribution.
CAUTION: Any withdrawals, rollovers or commencement of an income stream after a personal contribution has been made can partially or fully reduce the amount of the contribution that can be covered by a subsequent notice of intent.
• Any amount specified in the notice of intent form that is disallowed as a deduction by the ATO will count toward the
member’s NCC cap, and may result in exceeding the NCC cap. This can happen if the individual does not have sufficient
assessable income (after allowing for other deductions) to claim the deduction.
• A general rule of thumb is that an individual should not salary sacrifice or make personal deductible contributions that would
reduce their taxable income below their effective tax-free thresholds. Taxable income below the effective tax-free threshold
is taxed at 0% for resident individuals, compared with 15% if contributed to super as concessional contributions.
• The effective tax-free threshold for the 2019-20 financial year, after applying the Low Income Tax Offset (LITO), the Low
and Middle Income Tax Offset (LMITO) and/or the Seniors and Pensioners Tax Offset (SAPTO), is shown in the table below:
| 2019-20 effective tax-free thresholds | ||
| Couple status | Tax offsets | Effective tax-free thresholds for 2019-20 |
| Single or member of a couple | LITO and LMITO | $21,884 |
| Single | LITO, LMITO and SAPTO | $33,088 |
| Member of a couple | LITO, LMITO and SAPTO | $29,783 |
Note: clients may have higher effective tax-free thresholds where they are entitled to other tax offsets.
*If a client is under 18 at the end of an income year, they can only claim a deduction for personal super contributions if they have employment or self-employed income.
**Includes the period up to 28 days after the end of the month in which the member turns 75.
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