1. What is a Personal Super Contribution?

Simply put, it's money you personally contribute to your superannuation fund after tax has already been taken out of your income. Unlike the super your employer pays (which is typically pre-tax), a personal contribution comes from your net income.

The magic happens when you tell your super fund you intend to claim a tax deduction for this contribution. This is known as a 'notice of intent to claim a deduction' form. Once processed by your fund and approved by the ATO, this contribution is treated as a 'concessional contribution' (like employer contributions), and you can then claim a deduction for it in your tax return.

2. Why Should You Consider Making One?

1. Reduce Your Taxable Income: This is the big one for your immediate benefit. If you claim a deduction for your personal super contribution, it effectively lowers your assessable income, meaning you could pay less tax or receive a larger tax refund.
• Example: If you earn $90,000 and contribute $5,000 to super (and claim it as a deduction), your taxable income effectively becomes $85,000.
2. Grow Your Retirement Nest Egg: Beyond the tax benefits, you're directly injecting more money into your super fund. This money is invested and grows over time, often benefiting from compound returns, setting you up for a more comfortable retirement.
3. Catch-Up Contributions: Did you know you might be able to use unused concessional contribution caps from previous years? If your super balance is below $500,000, you can carry forward unused portions of your concessional contributions cap for up to five years. This is a great way to top up your super if you have had a few years of lower income or haven't maxed out your contributions.

3. Important Rules and Caps

While powerful, there are rules around personal super contributions:

• Concessional Contributions Cap: For the 2024-25 financial year, the general concessional contributions cap is $30,000. This includes all employer contributions (Superannuation Guarantee) and any personal contributions you claim a deduction for.
• A Word on Timing: For your contribution to count in the current financial year (e.g., 2024-25), it must be received and processed by your super fund by June 30th. Many super funds recommend making payments at least a week before the end of the financial year to ensure it clears in time.
• Notice of Intent: You must submit a 'notice of intent to claim a deduction' form to your super fund (and have them acknowledge it) before you lodge your tax return for that year. Don't forget this crucial step!

4. Is This Strategy Right for You?

Making a personal super contribution is generally most beneficial for those who:

• Earn more than $45,000 per year (the tax savings are more significant).
• Have spare cash available before the EOFY.
• Are looking for long-term retirement planning strategies.
• Want to reduce their current year's taxable income.

5. Let Tax Savers Guide Your Super Strategy!

Understanding the rules and ensuring you meet all the requirements can be complex. That's why having an expert by your side is invaluable.

At Tax Savers, your Melbourne tax accounting firm, we can help you:

• Determine if a personal super contribution is the right strategy for your financial goals.
• Calculate how much you can contribute within the caps.
• Understand the tax implications and potential tax savings.
• Guide you through the process of notifying your super fund.
• Integrate this into your overall tax return preparation and financial planning.

Don't let another EOFY pass without exploring how you can use your super to your advantage. Contact Tax Savers today at taxsavers.com.au or give us a call. Let's work together to build a stronger financial future for you!