To claim a tax deduction for personal superannuation contributions, the member of the SMSF must complete a Notice of intent to claim or vary a deduction for personal super contributions (ATO form NAT71121).
Once the form is completed and given to the SMSF trustee by the member, the SMSF trustee must provide a written acknowledgement to the member that the form received is valid.
The member requires this acknowledgement from the SMSF before the member is permitted to claim the personal superannuation contributions as a tax deduction on their personal income tax return.
Superannuation Accounting Services will prepare the letter for you when you tell us that you have completed the Notice of intent to claim or vary a deduction for personal super contributions (ATO form).
If you require help completing the form, please contact us.
We can also prepare the form for you if you wish.
Note: the form is not to be sent to the ATO.
There are eligibility requirement and timing:
Age-related conditions and work test
If you are age 66 and under, you meet the age test and there is no work test requirements.
If you are age 67 but under 75, you are required to meet the work test in order to claim a tax deduction for your personal superannuation contributions. To meet the work test, you must be gainfully employed or self-employed for at least 40 hours in 30 consecutive days in the financial year. This is an annual test. This means once you meet this test you can make contributions for the entire financial year.
Note that if you reached age 75, you must ensure that the personal superannuation contributions are received by the SMSF before the 28th day of the month following the month in which you turned 75.
There is an exemption from meeting the work test if you have recently retired and meet the following:
Concessional contributions cap
Concessional contributions include employer contributions and personal concessional contributions. Therefore, if you receive employer contributions, you should ensure that any employer contributions plus personal concessional contributions does not exceed the concessional contributions cap amount.
If you meet the requirements for Carry forward unused contribution cap amounts and have unused concessional cap amounts from previous years, you may be able to utilise the prior years' cap amount.
For the concessional contributions cap amount, see rates and thresholds.
Does your personal income warrants the claiming of the personal superannuation contributions as a tax deduction?
You cannot claim a deduction for personal superannuation contributions for an amount that reduces your taxable income to less than Nil.
Tips
A deduction for personal superannuation contributions that reduces a SMSF member's taxable income to below the income tax free threshold, plus the effect of any available tax offsets, will cause the member to unnecessarily incur tax on the superannuation contributions without a tax benefit. This is because concessional contributions are taxed at 15% inside the superannuation fund.
For example, if an individual's taxable income (before deduction for personal superannuation contributions) was $40,000, and that individual made personal superannuation contributions of $30,000 and claimed that whole amount as personal superannuation contributions, it would reduce that individual's taxable income to $10,000. This would not be ideal as the individual would have over-claimed the deduction for personal superannuation contributions - whilst the individual will pay no tax on the personal income tax return, the tax on the SMSF on tax deducted super contributions will be $4,500 ($30,000 x 15%).
If however, the individual claimed $17,425 of the $30,000 of the personal superannuation contribution as a tax deduction, it would reduce that individual's taxable income to $22,575. For the 2024-25 income tax year, with low income tax offset, the individual will pay no tax on the personal income tax return, and the tax on the SMSF on the tax deducted super contribution will be $2,613.75 ($17,425 x 15%).
Timing
The form must be completed on or before whichever of the following days occurs earliest, either:
Special rules apply if you withdraw or rolled over part of your super.
Do you need help with your situation or if you wish to discuss the above, please contact us. Our contact details.
