Reposting, as there doesn't seem to be a way to Mark as Unanswered or whatever:
I am relatively cashed up as a result of inheritance, 66 years old, and until recently, I had little in Super. I now want to build my Super balance as soon as possible, using a combination of Concessional Contributions and Non-Concessional Contributions.
My Unused Carry Forward Concessional Contribs for the current year amount is around $91k. I would like to pay that amount, knowing that 15% tax will then be deducted. From my point of view, this is fair and reasonable.
BUT - I am being told that I cannot make a contribution in this category because my overall income for the year is significantly less than that. Apparently, I have to claim the 15% tax as a deduction, and therefore I have to have enough income to create a 'tax burden'. (Section 26-55)
Therefore, (I am being told), I can only contribute in the Non-Concessional category.
Is there any way to make Concessional Contribution, pay the 15% tax, and then *not* claim it as a deduction?
Or, to put it another way - am I *forced* to claim the deduction? I've been told by the ATO/ phone that I'm not but no one else concurs with this.
It would be a good time for an ATO person to chime in.
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5 replies
Author: BrookeATO(Community Support)Community Support 11 Mar 2025
Hi @SuperChallenged and @MPrivate
Our Tech Team have gotten back to us.
The personal super contributions you claim as a deduction will count towards your concessional contributions cap. Since you've claimed a tax deduction for them, they're effectively from your pre-tax income. So, they're taxed in the fund at a rate of 15%. But, if you don't claim a tax deduction for them, they're non-concessional contributions and are from your after-tax income or savings. So, they're not further taxed in that case.
Once you turn 67:
- You can make personal contributions without meeting the work test (or exemption) but you can't claim a deduction for the contributions.
- You must satisfy the work test exemption for your super fund to accept a contribution so that you can claim a deduction. You should check with your super fund or RSA provider.
When you complete your tax return, you can claim a deduction for the amount of the contribution stated on your notice of intent. Make sure that you claim your deduction at the correct spot in your tax return. If you're lodging:
- through myTax, the deduction must be claimed at Personal super contributions
- a paper form, the deduction must be claimed at Personal superannuation contributions in the Individual tax return supplement.
If you don't claim your super deductions in the right spot, it may result in:
- an incorrect super co-contribution determination or excess contributions tax assessment
- an additional tax liability
- a tax shortfall penalty.
Generally, when your deductions are greater than your income for a year you'll have a tax loss. These losses can offset against income in a later tax year. However, you mentioned you'll be making Personal Super Contributions. Certain deductions can't be claimed for the year if they'll cause a tax loss. Personal Super Contributions is one of these. If you make a personal super contribution in a certain year and the result of claiming it as a deduction will be a loss, you won't be able to claim it. You can read a bit more about these types of deductions on our website.
You can find more info on personal super contributions and tax losses on our website.
Thank you so much for getting back to me although, sigh, I'm saddened by the answer. It seems to me to be a long-winded way of saying, 'no, you're not allowed to make concessional contributions if the total is (significantly) greater than your annual income.' Bugger.
Probably the weirdest part of it from the perspective of the ordinary person, is that we would view paying the 15% tax on the contribution as a payment of 15% tax. Whereas, it seems the ATO/ legislative view is that the contributions (any and all that are "concessional") are viewed as a 'deduction' and therefore what would seem like 'tax' is actually all part of the 'deduction'.
Hopefully, you can see why it's not intuitive. I would very much have liked to make an additional contribution to my super account, and I was (am) very happy to pay tax on it. But it turns out, I'm simply not allowed to. I am only allowed to make non-concessional contributions. So I have to kiss that outstanding carry-forward balance goodbye.
It's definitely not a happy outcome.
