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Redundancy and making avpayment into superannuation fund

Newbie

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I am 61 years of age and have been offered a VTSS redundancy.  I will have an ETP payment of approximately $20,000 which will be taxed.

 

My question is:  Am i able to make an after tax payment into my superannuation account equal to the gross ETP payment and then claim a deduction?  It is my understanding that the amount of tax should then only be 15% on the amount paid into the super account.

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Most helpful response

Devotee

Replies 0

Hi kfenton

 

Yes, since 1 July 2017 most individuals have become able to claim an income tax deduction for (after tax) personal contributions made to super.

 

Previously this deduction was restricted to individuals who received less than 10% of their income as an employee. ie it was primarily for self-employed individuals.

 

Here's a link to ato.gov.au information about claiming a deduction for personal super contributions.

 

The process is - you make the contribution. You notify the fund that you're intending to claim a tax deduction for some or all of the contribution. (This can often be done at the same time as making the contribution to the fund). The fund acknowledges the notification. (The fund then treats the contribution as an assessable personal contribution and includes it in the fund's income tax return and pays 15% tax on the amount of the contribution.) When lodging your income tax return for the financial year you then complete label D12 on the supplementary section of the tax return to claim the tax deduction.

 

One thing to keep in mind is the concessional contribution cap of $25,000 per year. Once the total concessional contributions made to super in a year exceed this you'll be paying your marginal tax rate on the contributions above the cap. Any assessable personal contributions count towards this cap. So do super contributions made by your employer and salary sacrifice contributions if you've been making any. You'd need to check with either your employer or your super fund to determine how much of your $25,000 cap space for 2017-18 has already been used up.

 

This is my personal view; I’m an ATO employee who chooses to help out here in my own time.

1 REPLY 1

Most helpful response

Devotee

Replies 0

Hi kfenton

 

Yes, since 1 July 2017 most individuals have become able to claim an income tax deduction for (after tax) personal contributions made to super.

 

Previously this deduction was restricted to individuals who received less than 10% of their income as an employee. ie it was primarily for self-employed individuals.

 

Here's a link to ato.gov.au information about claiming a deduction for personal super contributions.

 

The process is - you make the contribution. You notify the fund that you're intending to claim a tax deduction for some or all of the contribution. (This can often be done at the same time as making the contribution to the fund). The fund acknowledges the notification. (The fund then treats the contribution as an assessable personal contribution and includes it in the fund's income tax return and pays 15% tax on the amount of the contribution.) When lodging your income tax return for the financial year you then complete label D12 on the supplementary section of the tax return to claim the tax deduction.

 

One thing to keep in mind is the concessional contribution cap of $25,000 per year. Once the total concessional contributions made to super in a year exceed this you'll be paying your marginal tax rate on the contributions above the cap. Any assessable personal contributions count towards this cap. So do super contributions made by your employer and salary sacrifice contributions if you've been making any. You'd need to check with either your employer or your super fund to determine how much of your $25,000 cap space for 2017-18 has already been used up.

 

This is my personal view; I’m an ATO employee who chooses to help out here in my own time.