RE: Can you withdraw and reinvest super and claim tax deduction?

 Author: TaxCurious(Newbie)Newbie

21 Apr 2026

Dear RachelATO

Thanks for your reply - it is really helpful. It would be great to get this teased out a little. I have included a couple of examples - with the style inspired by the ATO's website. It would be great to get comments on these.

Thanks

Mary is 62 and has $70,000 in an accumulation account. Mary does the following in the same financial year:

1. deposits $30,000, balance become $100,000; then
2. submits a notice of intent to claim the full $30,000 as a tax deduction
3. observes that her super fund has withdrawn $4,500 of her super balance to remit to the ATO as contributions tax, making her balance $95,500
4. withdraws $30,000.

Now Mary has a balance in super of $95,500 and a tax deduction of $30,000 that she can apply against income she earned in the year in the financial year in which she made the contribution.

Is this correct?

Bill is 62 and has $70,000 in an accumulation account. Bill does the following in the same financial year:

1. deposits $30,000, balance become $100,000; then
2. withdraws $30,000 from his account, so the balance becomes $70,000; then
3. submits a notice of intent to claim a tax deduction for his contribution;

I don't know how much Bill can claim a deduction for? Is it:

1. Bill can claim the full $30,000 as a deduction (because the $30,000 that Bill deposited is still in the account and the $30,000 he withdrew comes out of the $70,000 that was already in the account, so his remaining $70,000 balance is comprised of $40,000 "old" money plus $30,000 "new" money (less $4,500 contributions tax))? or
2. Bill can claim $0 as a deduction (as he has withdrawn the $30,000 he put deposited)? or
3. Bill can claim a deduction for $21,000 (because the withdrawal is pro-rated against his balance - the $30000 represents 30% of his balance, so 30% of his withdrawal comes from the "new" money and 70% from the "old" money)?
4. Bill can claim something else, based on an the line above "If only part of the super interest is withdrawn, any deduction is limited to the amount of the contribution that remains in the fund."

Thanks for any comments.

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 Author: NikkiATO(Community Moderator)Community Moderator

22 Apr 2026

Hi @TaxCurious,

The legislation and guidance set the conditions for when a deduction may be available, but they don’t go on to define how withdrawals are matched to particular contributions or how those amounts should be allocated in worked examples like the ones you’ve outlined.

In practice, the test is applied by looking at what portion of the contribution is still held by the fund at the time the notice of intent is given. The law doesn’t provide for parcel‑by‑parcel, ‘old versus new’, or proportional tracing of amounts within an account, and different funds may process contributions, tax and withdrawals in different ways.

Questions relating to how the rules would apply to specific scenarios or determine which amount would remain deductible in examples would require applying the law to your particular facts and the way your fund administers the account, which is beyond the scope of what we can give here.

If you need certainty about how much of a contribution would remain deductible after withdrawals in your circumstances, that’s something a registered tax agent can review with you, or you can seek a private ruling to have the law applied to your specific facts before acting.

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