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Ask Colley on deductible contributions

By AMP Capital

In this edition of Ask Colley, Graeme answers “What do I need to know about the new rules relating to claiming a tax deduction if I’m making super contributions this year?”

Q: What do I need to know about the new rules relating to claiming a tax deduction if I’m making super contributions this year?

A: This tax year will be the first time you’ll be able to claim a tax deduction of up to $25,000 for any contributions you make to super.  Before 1 July last year, most employees were unable to claim tax deductions for personal contribution to super but the rules have changed so, but now they can.

But before you can claim the deduction, there are a few things you’ll need to consider.  

The contribution must be made this financial year, but before you claim, you need to estimate how much your employer has contributed to super.  These are mainly Super Guarantee contributions or contributions from any salary sacrifice agreement that’s in place.  The reason is that those amounts will be included in the $25,000 cap you can claim.  Once you’ve worked that out as a rough estimate, then you can then make the contribution for any difference.

The next thing you’ll need to do is to tell the fund by sending it an election you’re going to claim a tax deduction for some or all of the contribution. An election can be made up to the time your tax deduction is sent to the ATO or at the latest by the end of the next financial year.  This will give you more time to work out how much your employer has contributed to super for this tax year.

If the contribution is being made to an industry, retail, or corporate fund it’s worthwhile to contact the fund to find out details about making the election as you may need to have it sent to the fund earlier than what the rules say.  For an SMSF it’s essential that the election is in writing and kept in the fund records.

Then it’s up to the fund to acknowledge the contribution made, as that’s required under the law. So, no matter if it’s a big fund or your SMSF, the acknowledgement needs to be provided.

Once the fund knows you’re going to claim the tax deduction, the amount you’ve notified will be taxed at 15 per cent but you’ll get a tax benefit depending on your personal tax rate.  If your personal tax rate ends up being less than 15 per cent it may not be worthwhile claiming the deduction.  

As an alternative, if you are a low-income earner, you may find that you could be eligible for the co-contribution which is a payment from the government of up to $500 for non-deductible contributions of up to $1000 you have made to super.

Personally, I’ll be looking to claim a tax deduction on contributions I make this year. This will mean getting that contribution to the fund by 30 June this year, working out the amount my employer has made to super, making the election before my tax return goes to the ATO, then claiming a tax deduction, and waiting until any refund due arrives in my bank account.

  • Regulation
  • SMSF News
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Important notes

While every care has been taken in the preparation of this article, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455)  (AMP Capital) makes no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This article has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this article, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This article is solely for the use of the party to whom it is provided and must not be provided to any other person or entity without the express written consent of AMP Capital.


This article is not intended for distribution or use in any jurisdiction where it would be contrary to applicable laws, regulations or directives and does not constitute a recommendation, offer, solicitation or invitation to invest.

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