Putting money in your superannuation will not only give your balance a nice boost - it could also save you tax if you claim a tax deduction on your eligible after-tax contribution.

With the end of the financial year in sight, now is the perfect time to learn about how making an after-tax contribution to super could save you tax. That’s because eligible contributions are taxed at only 15% instead of your PAYG rate.

How much could you save with a tax deduction?

Here are two case studies that look at how making after-tax contributions of $2,000 and $5,000 could help you reduce tax. In both examples, a salary of $100,000 has been used. The after-tax contribution is claimed as a tax deduction.

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What could a $2,000 after-tax contribution that is claimed as a tax deduction mean to your super balance and tax return?

Even though the net annual income is reduced, when you take into account the extra money put into your super, the net benefit is $540. 

 

Without tax deduction

With  tax deduction

Salary (before tax)

$100,000

$100,000

Minus personal concessional contribution

$0

$2,000

Income tax¹ deducted

$25,717

$24,877

Net annual income

$74,283

$73,123

 

 

 

Extra money put into super

$0

$2,000

Super contributions tax²

$0

$300

Net increase to super

$0

$1,700

 

 

 

Better off (also the ”tax saving”)

 

$540

1. Including Medicare levy (ML) and the Low and Middle Income Tax Offset (LMITO)

2. Deducted when the ‘Notice of Intent to claim a tax deduction’ form is accepted by the super fund.

This case study is for illustrative purposes only. It is intended to provide general information only. It has been prepared and does not take into account your objectives, financial situation or needs. Seek professional financial advice, consider your own circumstances and read our product disclosure statement before making a decision. Past performance is no indication of future performance. Issued by FSS Trustee Corporation ABN 11 118 202 672, AFSL 293340, trustee of the First State Superannuation Scheme ABN 53 226 460 365. Financial planning advice is provided by State Super Financial Services Australia Limited, trading as StatePlus ABN 86 003 742 756 AFSL No. 238430. A wholly owned company of First State Super.

What could a $5,000 after-tax contribution that is claimed as a tax deduction mean to your super balance and tax return?

Even though the net income is reduced, when you take into account the extra money put into super, the net benefit is $1,350.

 

Without tax deduction

With  tax deduction

Salary (before tax)

$100,000

$100,000

Minus personal concessional contribution

$0

$5,000

Income tax¹ deducted

$25,717

$23,617

Net annual income

$74,283

$71,383

 

 

 

Extra money put into super

$0

$5,000

Super contributions tax²

$0

$750

Net increase to super

$0

$4,250

 

 

 

Better off (also the ”tax saving”)

 

$1,350

1. Including Medicare levy (ML) and the Low and Middle Income Tax Offset (LMITO)

2. Deducted when the ‘Notice of Intent to claim a tax deduction’ form is accepted by the super fund.

This case study is for illustrative purposes only. It is intended to provide general information only. It has been prepared and does not take into account your objectives, financial situation or needs. Seek professional financial advice, consider your own circumstances and read our product disclosure statement before making a decision. Past performance is no indication of future performance. Issued by FSS Trustee Corporation ABN 11 118 202 672, AFSL 293340, trustee of the First State Superannuation Scheme ABN 53 226 460 365. Financial planning advice is provided by State Super Financial Services Australia Limited, trading as StatePlus ABN 86 003 742 756 AFSL No. 238430. A wholly owned company of First State Super.

To learn more about after-tax personal contributions, just click on the heading to get answers to the following questions:

Claiming a tax deduction for personal contributions

Who can claim a tax deduction?

If you’re under 65 years of age, you can claim a tax deduction for after-tax contributions regardless of your work situation.

If you’re aged between 65 and 75, you’ll need to meet the work test before you can make an after-tax contribution. To satisfy the work test, you need to have worked a minimum of 40 hours within 22 consecutive days during the financial year.

There is a $25,000 annual before-tax (concessional) contributions cap which also applies to after-tax contributions that you claim a tax deduction on. The cap is inclusive of the Superannuation Guarantee (SG) contribution paid by your employer.

Claim your tax deduction in three steps:

Step 1

Notify us so we know you’re looking to claim a tax deduction by completing a Notice of intent to claim a tax deduction for personal contributions form and send it to us.

Once complete, you can either:
Email it to: enquiries@firststatesuper.com.au  or 
post it to:
            First State Super
            PO Box 1229
            Wollongong NSW 2500

You should do this before you lodge your tax return for that financial year and before the end of the financial year following the year you made the contribution.

Step 2

Once we receive your form, we'll adjust the tax on your contribution to the lower rate of 15%. You will then receive a letter from us acknowledging that this has been done. You must receive this acknowledgement before you can claim the deduction on your tax return.

You must receive this acknowledgement before you can claim the deduction on your tax return.

Step 3

Complete your tax return. You will need to state the amount you want to claim in the tax return for individuals (supplementary section).

Ways to pay

We can’t accept personal contributions without first receiving your tax file number (TFN) so please make sure we have it. You can provide your TFN by calling us on 1300 650 873 Monday to Friday, 8:30am – 6:00pm (AEST/AEDT).

BPAY

This is the quickest and easiest way to make a payment.

You have a unique customer reference number (CRN) depending on the type of contribution you want to make.

You can find your BPAY biller code and CRN by:

logging into our app, or

logging into your account online, or

you can call us on 1300 650 873 from Monday to Friday, 8:30am – 6:00pm (AEST/AEDT).

Just enter the details into your online or phone banking the same way you would with a utility bill.

Remember, your CRN is a unique number and is different to your membership number. It helps us identify you and makes sure your money goes into your personal super account.

Electronic funds transfer

You can pay by internet or phone banking using the following details:

Bank: Commonwealth Bank of Australia
Account name: First State Super
BSB: 062 000
Account number: 10226245

To account description: Use your First State Super member number plus the first six letters of your surname.

To ensure we are able to correctly identify your payment, you need to send us a completed Personal contributions by cheque or EFT form by post or email: cru@mercer.com

Direct debit

See our direct debit request form for more details.

Raiz

The Raiz app is like a virtual piggybank. Linked to your credit or debit card, the app rounds up the cost of everyday purchases and invests the difference for you. You can then use the money you save to boost your super by making a personal contribution from the app to your account using BPAY®.

Tell me more about Raiz

Don’t forget contribution limits apply

There is an annual cap on how much you can contribute into your super.

Limits if you’re claiming a tax deduction (or making before-tax contributions)

There is a cap of $25,000 on the amount of before-tax (concessional) contributions you can make each year – and this limit also applies on after-tax contributions that you’re claiming a tax deduction on. This $25,000 cap is inclusive of the Superannuation Guarantee paid by your employer.

Limits for after-tax contributions

The current after-tax contribution cap is $100,000 annually or $300,000 over a three-year period if you are less than age 65. Transitional arrangements apply if you are already in a three-year period that started before 1 July 2017. Only people with a total superannuation balance of less than $1.6 million are eligible to make after-tax (non-concessional) contributions.

What if you exceed these limits?

Amounts over these caps are known as excess contributions. If you exceed the cap, the Australian Taxation Office (ATO) will give you an opportunity to withdraw the excess amount from your super fund, along with 85% of the investment earnings. Any associated earnings withdrawn will be taxed at your marginal rate of tax, less a 15% rebate for tax already paid in the fund.

We are here with the right support and advice

As a member, you can speak to one of our super advisers over the phone at no additional cost.

Click here to book your appointment or you can call us on 1300 650 873 from Monday to Friday, 8:30am – 6:00pm. (AEST/AEDT).

Would before-tax (salary sacrifice) contributions be more suitable?

If your employer offers salary sacrifice, you can ask your payroll officer to make regular deductions from your pre-tax salary into your super. Eligible super contributions are taxed at 15% rather than your income tax rate, which could be as high 45%. 

I would like to find out more about salary sacrifice