dmca accountant and business adviser Alison Stanbridge answers some common questions about maximising deductions with superannuation contributions by June 30. For any questions, contact [email protected] .

Can I make more tax effective superannuation contributions this year?

Whilst superannuation contributions boost your balance to retirement, there is a limit as to how much you can contribute to superannuation concessionally.  Concessional contributions are those made from before-tax income and include both employer contributions and those personal contributions you are allowed an income tax deduction. Your fund pays 15% tax on receipt of these contributions. From 1 July 2021, the concessional contribution cap increased to $27,500 per annum so you may find you have some room to contribute more.
However, if you had a total superannuation balance (see below) of less than $500,000 at 30 June 2021, the carry forward rules allow you to make extra concessional contributions above the general concessional contributions cap by accessing unused concessional cap amounts from previous years. An unused cap amount occurs when the concessional contributions you made in a financial year were less than your general concessional contributions cap. You can use unused caps from up to 5 previous financial years, however the unused cap amounts will only start accruing from 1 July 2018.

Am I going to exceed the concessional contributions cap?

Review your contributions to date and estimate to 30 June. If you think you may be close to exceeding your concessional contribution cap by 30 June this year, consider if there are any contribution payments you can defer to the next financial year that you make personally. And ask your employer when they will make their electronic contributions (such as salary sacrifice and super guarantee amounts) to your super fund. Employers are only required to make their super guarantee contributions for the last quarter of 2021–22 by 28 July 2022. If your employer pays more frequently you may be able to request a delay in payment until the normal 28 July date but remember this will affect your contributions cap for next financial year. Information on your contributions can be accessed directly from your superannuation funds and often online. If you have the Australian Taxation Office linked to your MyGov account, you can also view some of your superannuation information there.

Do I have to tell my fund of my intention to claim a tax deduction for personal superannuation contributions paid?

If you wish to claim a tax deduction for personal superannuation contributions, you must give a notice of intent to claim a deduction to your super fund on or before whichever of the following days occurs earliest, either:

–the day you lodge your tax return for the year in which the contributions were made

–the last day of the income year after the income year in which you made the contributions.

Where you contribute only once a year, it is good practice to lodge your notice of intent straight after making your personal superannuation contribution.

Can I access a tax benefit by making a spouse contribution?

You can obtain a tax offset of up to $540 by contributing to your spouse’s superannuation fund. The sum of your spouse’s assessable income (excluding any assessable First Home Super Saver released amount or COVID-19 early release of superannuation payment), total reportable fringe benefits amounts, and reportable employer superannuation contributions must be less than $40,000.

Other spouse contribution eligibility criteria:

• the contributions you made on behalf of your spouse were not deductible to you
• the person was your spouse when you made the contribution
• both you and your spouse were Australian residents when you made the contributions
• you and your spouse were not living separately and apart on a permanent basis when making the contributions, and
• your spouse did not have:

— non-concessional contributions totalling more than their non-concessional   contributions cap for 2021–22, or

— at 30 June 2021, a total superannuation balance of $1.7 million or more.

When should money be sent to a super fund to ensure it gets there by June 30?

Each superannuation fund has their own contribution cut-off date and time. The funds indicate that by paying your contribution by the cut-off date and time they will be able to process your contribution by 30 June.  But these dates and times can also vary depending on the deposit method chosen.  To allow for delays in payment processing, I would aim to pay your contributions by 24 June 2022.

What happens if people don’t get the timing correct?

If your contribution isn’t processed by your fund by 30 June, the contribution may be allocated to your next year contribution cap. If you go over the concessional cap you can elect to withdraw the excess and it will be included in your assessable income and taxed at your marginal tax rate which may result in you paying more tax. You do receive a 15% tax offset on the excess to account for the tax already paid in your fund.  You can also elect to withdraw up to 85% of the excess from your super fund to pay your income tax liability.
If you decide not to release your excess concessional contributions, any excess that also results in you breaching your non-concessional cap could have an effective tax rate up to 94%. The non-concessional cap is for after-tax contributions, such as those from your net pay where you don’t claim a tax deduction.