FocusOn - Are you eligible to claim Personal Superannuation Contributions?

A tax deduction for personal superannuation contributions is available for self-employed taxpayers or those that satisfy the '10% rule'. The 10% rule is satisfied where less than 10% of the individual's total income is from employment related activities.

Total income is assessable income plus reportable fringe benefits plus reportable superannuation contributions.

The inclusion of “reportable superannuation contributions” applies for the 2010 financial year onwards.

Assessable income includes ordinary and statutory income but does not include exempt income.

The following are included in assessable income:

	gross business income
	salary and wages
	net capital gains
	dividends
	interest
	lump sum super withdrawals (<60)

Income from employment related activities includes salary and wages, director’s fees, workers compensation payments, payments made under personal accident insurance and income protection and disability insurance policies where they are paid to replace lost earnings.

Reportable fringe benefits are those benefits shown on your payment summary for the relevant income year.  If the value of certain fringe benefits provided to you or your associate exceeds $2,000 in an FBT year (1 April to 31 March), your employer must record the grossed-up taxable value of those benefits on your payment summary for the corresponding year.

Reportable Superannuation Contributions are those contributions made by an employer where all of the following apply:

	the employee influenced the rate or amount of the contribution
	the contributions are additional to the compulsory contributions you must make under any of the following:
	super guarantee law
	an individual agreement
	the trust deed or governing rules of a super fund
	a federal, state or territory law

Overview

If you are self employed or meet the “10% rule” you may claim a tax deduction for your personal member contributions.  The annual concessional cap limits apply as does excess contributions tax if the cap is exceeded.

You may only claim a deduction if you have:

	lodged the prescribed form with your fund, and
	received notification from your fund advising of the amount allowed for deduction.

Example

Bob earned business income of $100,000, reportable fringe benefits of $2,000 and employment income of $50,000.  Bob salary sacrificed $45,000 to his nominated fund. 

Planning Opportunities

Although salary sacrifice is no longer an effective option to use to enable you to meet the “10% rule” there may be other options available to you. You should monitor your individual situation and contact us to discuss these options well before the end of the financial year.

Published : November 2009