• Amanda Amey

How to Claim a Tax Deduction on superannuation payments



Whether you are a small business paying employee superannuation contributions, or whether you are an employee who has contributed to your own personal superannuation, you may be eligible to claim a Tax Deduction for this.



As a business you are obligated to pay 9.5% superannuation to your staff's superannuation fund. This is called SGC (superannuation guarantee contributions) (This is increasing to 10% as of the 1st July 2021). (For more information on the increase.) This is a compulsory contribution if your employee is earning $450 or more per month. (Watch this space however, as on the 11th May 2021, as part of the 2021-2022 federal budget, the Australian Government announced it will looking to remove this threshold)


So you have to pay it, but do you get a tax deduction for it?


The simple answer is that you can, but eligibility requirements apply and you must adhere to the timing rules.

To get the tax deduction in the year that you actually pay it, it must be in the employee's superannuation fund no later than 30th June that year. If you only pay it on the 30th June, it is highly unlikely that it will be in the employee's superannuation fund by the 30th June. The Superannuation funds mostly use clearing houses for the administration (or you can use the ATO's small business clearing house) but ultimately, you need to allow admin time to ensure that the funds are cleared and in the account by 30th June. If it is not, then unfortunately, the Tax deduction only counts towards the following financial year.


If, however, the superannuation is not paid and in the employee's superannuation fund by the due date (generally the 28th day of the month following the quarter), it becomes overdue, and you lose any eligibility to claim the payment as a tax deduction altogether. In fact, you also have to then complete a superannuation guarantee charge statement and possibly pay a penalty and interest. (headache!)


If you have contributed to your own superannuation fund, the dates above still apply. To get a tax deduction for your personal superannuation, it must be an AFTER tax contribution. It cannot be salary sacrificed into your superannuation fund. If you have contributed the superannuation with after tax money, then the contribution may be concessional, which means you may get a tax deduction.


To claim a tax deduction you must contact your superannuation fund and provide them a letter of intent. (Advise your superannuation fund of the amount that you are claiming as a tax deduction). Your superannuation fund must provide written confirmation back to you, and this is then the amount you can ask your Tax Agent to claim on your Tax return.


REMEMBER that there is a cap on concessional contributions, and any SGC / employer contributions are included in this concessional cap amount.




This articles intention is to inform rather than advise and is based on legislation at the time. Each Taxpayer’s circumstances vary so we strongly recommend that you discuss this information with your Tax Agent, Accountant or Bas Agent before implementation. If you take, or do not take action as a result of reading this article, we accept no responsibility for any financial loss incurred. General advice only. Source : ato.gov.au