Based on more than 2,090 calls from advisers received by AMP’s technical superannuation adviser support team in March, claiming a tax deduction for personal super contributions was one of the top issues that advisers asked about.
AMP technical strategy manager John Perri said that, this month, there has been an increased focus on clients looking for ways to reduce their tax bill, by taking advantage of a relatively recent change allowing employees to claim a tax deduction for voluntary personal super contributions.
Under the current rules, taxpayers can make extra super contributions, up to the concessional contributions cap of $25,000 each financial year, and claim the amount as a personal tax deduction in their tax return.
Until 1 July 2017, this rule was previously limited to the self-employed or those who earned less than 10 per cent of their overall income from employment sources.
“Personal deductible contributions can be made at any time during the financial year, giving people greater flexibility to save through super, which might be particularly beneficial leading up to tax time,” Mr Perri said.
“By April, people can start to better understand their tax liability for the year and how close they are to reaching their concessional contributions cap.”
Claiming a tax deduction for personal super contributions may be a useful way to maximise an individual’s concessional contribution cap or it could be a useful tool to manage a capital gains tax liability, Mr Perri said.
He also noted that, if elected, Labor intends to reinstate the 10 per cent test, which will again restrict the ability to make personal super contributions to the self-employed only.
