Tax Deduction on Super Contributions

You can make additional contributions up to your concessional contributions cap and claim an income tax deduction for doing it.

The concessional contributions cap for the 2024 year is $27,500. This will increase to $30,000 for the 2025 year. However, if your superannuation balance is less than $500,000 and your concessional contributions were less than the cap in previous years, the unused concessional contributions for each year from 2019 onwards can be brought forward (for up to 5 years) and used in a later year. 

This means you can tax effectively top up your super, provided you don't breach your concessional contributions cap.  The super guarantee payments made by your employer, as well as any salary sacrificed contributions, are also included in your concessional contributions so effectively the  amount you can pay into super through a tax deductible contribution is the difference between those other contributions and the cap.

A 15% contributions tax is deducted from any superannuation contribution that has  been claimed as a tax deduction.

If you are aged between 67 and 74 years of age, you'll need to pass the work test to  make a tax deductible contribution. That means that you have to work 40 hours or more  in a consecutive 30 day period in the financial year in order to make contributions.

Example

Todd is a fulltime dental assistant. During 2023-24, he earned $85,000 before tax. Todd  has no other income. Todd makes a personal contribution to an eligible superfund during the income year and notifies them that he intends to claim a deduction. Todd's superfund acknowledges  that Todd will claim a $15,000 deduction and taxes the contribution at 15% ($2,250). Todd is eligible to claim a deduction for $15,000 and does this in his 2024 Income tax return. 

This deduction will increase his tax refund by $5,175, an overall tax saving of $2,925.

If Todd makes a similar contribution in the 2025 year, and his circumstances are the same, his tax deduction for the $15,000 will increase his refund by $4,800 (due to the change in tax rates. His overall tax saving will be $2,550.

Tip

As well as making super contributions from your self-employed income or employment  income, it is also possible to make super contributions from investment income  (including dividends or rental income) and capital gains.

If you want to claim a tax deduction for your super payment, it must be made and processed by the super fund by June 30th. Make sure you allow time for bank transfers and for the super fund to put the funds into your account. Most super funds advise making the payments no later than June 23. You will also need to advise your super fund that you will be claiming a tax deduction for the contribution, and have received confirmation they have received this notification, by the time you lodge your tax return. H&R Block or your super fund can give you guidance on how to complete the form.

This information sheet is intended as a guide for H&R Block clients. All actual detail and circumstances differ,  please discuss your situation with a H&R Block Tax Consultant.  H&R Block is Australia's largest network of tax accountants with over 400 offices. Every year we help  thousands of Australians achieve a better taxation result. For your nearest office call 13 23 25.

June 2022