Spike in queries for contribution deductions in June

BTFA technical consultant Tim Howard said the opportunity to claim a deduction for personal super contributions became available to more people following the 1 July 2017 superannuation reforms.

“More clients are likely looking into this option given 2017/2018 was the first full financial year in which this option has become available to more people, after historically being available only to those who were self-employed,” he explained.

“Clients can use this strategy to top up their super contributions before the end of financial year if they remain under the concessional contribution cap limits. Clients are able to contribute, if they choose to, $25,000 per year in pre-tax money towards their super, inclusive of the superannuation guarantee and salary sacrificed contributions.”

Mr Howard said personal superannuation contributions may provide an alternative strategy beyond the salary sacrificing arrangements available through employers.

He reminded practitioners that previously, a 10 per cent maximum earnings test applied to determine if a client could claim a personal deduction for a contribution to super.

“This meant clients could only claim a deduction where less than 10 per cent of their income for the year was attributable to salary and wages,” he said.

“Since 1 July 2017, the 10 per cent maximum earnings test has been removed meaning clients with appropriate levels of assessable income can claim a tax deduction for a personal super contribution.”

Clients aged between 65 and 74 may also be eligible to use this strategy if they meet the work test, he said.

“Clients would need to be at least gainfully employed on a part time basis and working 40 hours in a period of up to 30 consecutive days to be eligible for personal super deductible contributions,” he explained.