Adding money to superannuations and scoring tax savings is possible. Keep reading till you have found out how to claim personal super contributions on tax returns. A huge count of the Australian population knows super is money just for retirement, but the least well-known fact is there is no need for relying on employer’s contribution for growing super savings. The better part is, the money added to super from your own earnings, post-tax is likely to be tax-deductible.
First, Be Clear With “What Is Meant By Personal Super Contribution?”
A personal super contribution is the contribution made to a super fund after you have paid the tax. Now do not confuse with the pre-tax contributions your employee is making or that part of the salary you are keeping aside into your fund. The focus here is after-tax super contributions.
A brief historical reminder – Just a few years ago, being self-employed was mandatory for claiming personal super contributions on tax. But since 1st July 2017, everything has changed. Now, claiming a tax deduction for personal contributions is possible being a salaried employee. Nevertheless, a few points should be noted here.
How Can Personal Super Contributions Be Made?
It is easy to make a tax-deductible contribution to your fund. It can be done as a bill payment from a daily bank account. Check that you are having the right BPA details for your fund, then give yourself a few days before 30th June so the money reaches your super account.
Yet another easy option is speaking with the employer and asking them for getting it done for you. Just like salary sacrifice arrangements, wherein the employer makes an extra amount payment of pre-tax income to your super, most of them will be doing the same with post-tax income.
An important aspect for memorizing is the contributions should be post-tax if they should be claimed as the deduction on your tax returns.
How Does Tac Deductible Super Work On Your Tax Returns?
The two important steps towards claiming a personal super contribution on your tax return with help from tax agents hired from a renowned firm in Hobart.
• Getting in touch with a super fund, inform them about claiming a deduction for your personal superannuation contributions
• Ensure getting their reply before lodging tax returns.
Hearing back from them will help you lodging tax returns. You need to enter the amount to be claimed as the deduction on your tax return at item D12, Personal Superannuation Contributions.
An Important Point to Note – Limitations Are Put In For the Amount of Super To be Claimed
As stated by the ATO, the above-mentioned process is good for effectively converting an “after-tax” super contribution to a “before tax” super contribution. The important aspect to be noted here – each year you can add up to $25,000 to super in “before tax” or concessional contributions before the higher tax rate becomes applicable. Usually, these are comprised of –
Mandatory contributions from your employer (your salary’s 9.5% minimum)
Pre-tax or salary sacrifice contributions you have made.
Also, they will include any after-tax contributions you are intending to claim a deduction on.
Since we have reached the end of our discussion, so let us assume it is now all clear how will you be able to add to your superannuation and claim deductions on your tax returns. The process might not be as smooth as you think, but there is nothing to worry about since the tax agents will guide you with the procedures.
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