Who can make tax-deductible super contributions?

If you’re self-employed or not employed, you can claim a tax deduction for your super contributions. An individual under the age of 18 however can only claim a tax deduction for super contributions when his or her income comes from gainful employment, such as carrying on a business.

I have attempted to simplify the tax-deductibility rules into categories of individuals, but I suggest you also confirm your ability to claim a tax deduction with the Australian Taxation Office. Here goes: You can claim a tax deduction for super contributions if you fall into one of the following categories:

• You’re self-employed and not working under a contract principally for your labour.
• You’re not employed; for example, you’re a full-time investor or looking after children.
• You receive part of your income as an employee but less than 10% per cent of your assessable income and reportable fringe benefits are attributable to employment as an employee. Note that employment income includes reportable employer super contributions, such as salary sacrifice contributions, but doesn’t include Superannuation Guarantee contributions. Assessable income is gross income before any deductions are allowed, and includes salary and wages, dividends, interest distributions from partnerships or trusts, business income (including personal services income), rent, foreign source income, net capital gains and a few other items. Reportable employer super contributions are also added back to assessable income when working out whether an individual satisfies the 10% test – the employment income divided by total income must be less than 10% for an individual to claim a tax deduction for his or her own super contributions.

Note: Tax-deductible super contributions and other concessional contributions are subject to 15% tax within a super fund, which means that claiming a tax deduction for super contributions may not be tax effective if you pay less than 15 cents in the dollar tax on your income.

Important: If you plan to claim a tax deduction for a super contribution, you must notify your super fund in writing before you lodge your tax return for the financial year, or by the end of the financial year following the year the contribution was made, whichever is earlier.

You can find more information on the rules for claiming tax deductions for super contributions on the ATO website. Click here to access the relevant ATO link: Claiming deductions for personal super contributions.

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