Superannuation contributions including employer contributions and personal super contributions are cash amounts or assets contributed to a complying super fund for a person under the age of 75. Super contributions and the profit on the contributions are the key to building a great retirement nest. Generally, personal contributions to superannuation come from you after business profit or tax pay. If you are allowed an income tax deduction, these contributions will count in the direction of your non-concessional contribution cap.
The earlier you start to make personal contributions to superannuation, the more you are likely to benefit when you retire. This is because of the compounding effect of the super as a long-term investment. If you make personal super contributions and are a low to middle income earner, and do not claim these contributions as an income tax deduction, then you may be eligible for the super co-contribution.
In case you are not working and you are under the age of 65, you can make after-tax personal contributions to superannuation or retirement saving accounts. If you are 65 years or older, you can make after-tax personal super contributions if you:
- Are not yet 75 years old;
- Have been in paid work for at least 40hrs over 30 sequential days throughout the financial year.
If you’ve made contributions throughout the year to your superannuation fund, you may be able to claim a deduction on the contributions if you are between 18 and 75 years old and if you are:
- Unemployed or earn less than 10 percent of your entire income;
- Self-employed.
In case you want to make a claim on a deduction for personal super contributions, you have to lodge a legitimate notice of intent to your retirement saving account provider or super fund and have this notice identified (by writing) by your fund. This notice of intent must be given to your fund before:
- the day you provide your income tax return for the year wherein you made the personal super contribution;
- the end of the income year which follows the year wherein you made the contribution.
However, if you decide to claim a tax deduction on all your personal super contributions, you will not be eligible for a super co-contribution. In case you choose to claim a deduction for part of your personal contributions, the rest may be eligible for a super co-contribution if you meet the requirements. But before you make a decision, it is advisable to consult with a financial adviser.
You may also be able to make personal contributions into your spouse superannuation, if your spouse is:
- under the age of 65;
- under 70 years of age and has been in gainful work for at least 40hrs over 30 sequential days throughout the financial year.
