It marks, among other things, the cut-off date to make personal super contributions to your account.
We wrote this guide to help our members make personal contributions through the EOFY festivities.*
Personal contributions are voluntary contributions members make into their super fund in addition to the compulsory contributions made by their employer (currently 9.5% of someone’s salary).
People make personal contributions into their super to boost their retirement savings. Super is generally invested in stocks, property, bonds, cash and other assets in a concessionally taxed environment (super is generally taxed less than income from other sources). They may also be claimed as a personal tax deduction to reduce your total tax liability (more on this later).
Now on to tax deductions. Stick with me, I promise it’ll be worth it in the end.
Personal contributions are automatically allocated as non-concessional contributions. This means that they are not taxed when they go into an account, because they come from income that was already taxed by the government, e.g. a salary.
However, you may be able to claim personal super contributions as a personal tax deduction. This may reduce your income tax liability when lodging a tax return by the amount of the contribution claimed in that financial year.
This will mean that your personal contributions become concessional contributions and 15% tax is withheld by the super fund to be paid to the ATO. To claim, you must complete and submit a Notice of Intent to claim or vary a personal tax deduction form to email@example.com.
Yes, if you are under 65 you can make a personal contribution. If you are between 65 and 74 you must pass the ‘work test’ of working more than 10 hours per week to make a personal contribution. If you are over 75 you cannot make personal contributions.**
Yes and No, if you choose to make your contribution regularly you must use the same amount, frequency and payment reference when transferring money. However, if you make contributions of varying amounts on varying frequencies you will need to complete a new personal contribution form each time.
Yes, if you claim a tax deduction for a personal super contribution, the contribution will count towards your concessional (before-tax) contributions cap of $25,000. From 1 July 2018 onwards you can bring forward your unused concessional contributions cap to the next financial year. The first year you can bring forward your unused cap is 2019-2020, but only if your balance is less than $500,000 at the end of June in the previous financial year. For more information, the ATO’s website has a useful guide.
*Please note any information provided is general in nature and should not be considered personal financial advice. We recommend you speak to a qualified financial adviser for personal advice.
**Please confirm you are eligible to make contributions to Future Super.