Since the start of the previous tax year – ie from the 1st of July, 2017 – it has been possible for individuals to make personal contributions to an Australian superannuation fund, and to claim a tax deduction for contributions paid.
The result of making a personal contribution to a super fund is to reduce the individual’s taxable income.
Prior to this date it was not possible to claim a tax deduction for a superannuation contribution made personally if, during the income tax year, the taxpayer obtained 10% or more of the total of the following as an employee:
- Assessable income
- Reportable fringe benefits
- Total reportable employer superannuation contributions.
From the 1st of July, 2017 the requirement that the taxpayer derives less than 10% of his/her income from employment sources has been abolished.
There are limits on the amounts that can be contributed to an Australian superannuation fund each tax year; if you are minded to optimise your superannuation position we recommend that you discuss your situation and plans with our financial planning colleagues at bdhSterling.
From the current tax year it is also possible for certain individuals to carry forward unused amounts from their concessional contributions cap, and to catch up with their retirement savings.
The Federal Government has announced:
From 1 July 2018, millions of individuals with balances below $500,000 will be able to ‘catch up’ on their retirement savings by accessing unused portions of their concessional contributions cap.
These unused portions can be carried forward for five years to enable extra contributions from 2019-20 onwards where people have the financial capacity to do so.
Superannuation is a valuable tool to be utilised by Australian residents in the context of tax mitigation, and the recent changes provide further flexibility and opportunities for individual taxpayers.
bdh Tax recommends a discussion with our financial planning colleagues at bdhSterling if you want to save for your retirement and plan your financial affairs tax efficiently.
Disclaimer: The above commentary represents advice of a tax nature and is not financial planning advice on which the reader can rely. bdh Tax is a firm of registered tax agents; advice regarding matters of a financial planning nature should be taken from a duly licensed financial planner, such as bdhSterling.