Chartered accountant GAIL FREEMAN has a client keen to add to his superannuation. Here she explains the process to get the best tax outcome.

My client, Deepika, wants to pay some savings into her superannuation fund, but wants to do it as tax effectively as possible.

She went online, but couldn’t work out what was needed, so she came to see me for some guidance.

“Deepika, there are a few things you need to understand, which I will explain to you, and then you can claim the deduction in next year’s tax return,” I said.

“Firstly, the maximum concessional amount that can be paid in one year into your superannuation fund is $27,500, including all contributions paid by your employer.

“In addition, you can make catch up concessional contributions provided that your total superannuation balance at July 1 2023 is less than $500,000.

“For the last five years, starting July 1 2019, if you did not claim the maximum amount you are eligible to claim, then you can carry this amount forward for up to five years, but it expires at the end of five years. Therefore, 2024 is the last year you can claim based on the contributions made in 2020.

“It appears you have available about $17,000 from the 2020 financial year and $3000 from 2021. In the following years, you’ve maximised your claims accordingly, you can make a deduction of $20,000 as catch-up contributions and you will receive a tax deduction when you lodge your tax return next year.

“It also appears you’ll have about $5000 in the current year. So the total amount that you can pay this financial year is $25,000. This will all be available to use as a tax deduction.

“If you don’t pay the $17,000 that’s available to you from 2020, it will lapse. So it’s important, if you want to get the most benefit out of your superannuation, that you pay this amount this year.”

Deepika said she had no idea about the catch-up contributions.

“That is very helpful for me as my superannuation balance is not as high as I would like it to be, and I do have sufficient savings at the moment,” she said.

I told her the mechanics of claiming the tax deduction was the hard bit.

“When you log on to your super fund to make the payment, you need to make sure you’re making a personal superannuation contribution,” I said.

“It is not an after-tax super contribution. You complete the form and you also have to complete a form called ‘notice of intent to claim a superannuation deduction’, which you will find on the superannuation fund website or at the ATO.

“If you do not have a ‘notice of intent to claim a superannuation deduction’ completed and acknowledged by the fund you cannot claim that tax deduction.

“It is critical that you have the form and the acknowledgement by the fund of receiving that concessional contribution so that you can claim your tax deduction. Once you have the acknowledgement of your contribution you can provide it to me and we can claim it in your next year’s tax return.

Deepika was pleased. “That has simplified something that was very confusing when I looked at my super fund website,” she said.

If you need advice on superannuation deductions or any other superannuation or tax related matter, contact the expert team at Gail Freeman and Co on 02 6295 2844, email info@gailfreeman.com.au or visit gailfreeman.com.au

Disclaimer
This column contains general advice, please do not rely on it. If you require specific advice on this topic please contact Gail Freeman or your professional adviser. Authorised Representative of Lifespan Financial Planning Pty Ltd AFS Lic No. 229892.