Got some spare money that you have paid tax on? Put it into your super and you may be able to claim a tax deduction.
Why should I make after-tax contributions?
Also known as non-concessional contributions, you can make after-tax super payments from money you have already paid income tax and will not be claiming a tax deduction on. For example, you could make a lump sum contribution using money from your savings, an inheritance or the sale of an asset. Putting that money into your super makes it work hard for your future.
Additionally, the earnings on your super investments are only taxed up to a maximum of 15% in comparison to the earnings on your investments or savings outside of super, which is typically taxed at your higher income tax rate.
Can I claim a tax deduction on my after-tax contribution?
If you have provided us with your tax file number (TFN) and decide to claim a tax deduction on your after-tax contribution, doing so could be beneficial given that your contribution will only be taxed at 15% if you earn less than $250,000 a year, or 30% if you earn $250,000 or more. These taxes are usually lower than what most people would pay on their taxable income.
Note that claiming a tax deduction on your after-tax contribution would turn it into a concessional contribution. Therefore, you may like to check that you are still within the $25,000 concessional contributions cap. To assess if you are nearing the concessional contribution cap, log in to your account. You can find this information under ‘Superannuation balance history’.
Government co-contribution scheme
You may also be able to benefit from the government’s co-contribution scheme if you make a post-tax contribution and meet the ATO’s eligibility criteria.
Are there limits to how much I can contribute?
If you’re under 67, there is a cap of $100,000 per year however you can use a ‘bring forward’ rule to contribute up to $300,000 in a single year by using your future year caps. If you use up your future year caps in one year, you will not be able to make any additional non-concessional contributions for three years. If you exceed the cap, you may have to pay extra tax. To assess if you are nearing the non-concessional contribution cap, log in to your account.
Additionally, to make a non-concessional contribution, your total super balance must be below the general transfer balance cap at the end of the previous financial year ($1.6 million from 2017/2018).
For those who are 65 years or older, you will not be able to access the bring-forward provision. Your non-concessional cap is limited to $100,000.
If you are between 67 and 74 years old, you must fulfill a work test that shows you were employed for at least 40 hours over a consecutive 30-day period before you can make voluntary super contributions.
If you are 75 and older, you are not eligible to make after-tax contributions.
To learn more about after-tax contributions, visit the ATO website.
How do I make an after-tax contribution to my super?
Log in to your account. Under the ‘Self-service’ tab, select ‘Make a contribution’. From there, you can choose to make a payment via direct debit, BPay or a cheque. Details to make a Bpay payment are as follows:
Biller code: 444232
Reference: This is your account number, which you can find when you log in to your account or from your annual statement.
Contact your bank, credit union or building society to make this payment from your cheque or savings account. Please check with your bank for your transfer limits.
If you make a payment via BPay or a cheque, please also complete the Lump Sum Contribution form to let us know which investment options you’d like the money to be placed in.
You can also speak to your employer to request that they make regular after-tax contributions on your behalf.
How do I claim a tax deduction?
You can inform us via the Lump Sum Contribution form at the time when you are making a payment.
Alternatively complete the Notice of Intent form which you can download from the ATO website. You can either email the completed form to email@example.com or post it to PO Box 656, Burwood NSW 1805. For more information about the Notice of Intent, visit the ATO website.
If you need help to assess if making after-tax contributions is suitable for you, you can make an appointment with one of our financial planners.
Any advice contained in this document is of a general nature only, and does not take into account your personal objectives, financial situation or needs. Prior to acting on any information in this document, you need to take into account your own financial circumstances, consider the Product Disclosure Statement for any product you are considering, and seek independent financial advice if you are unsure of what action to take.