A person can reduce personal tax payable, or reduce realised capital gains by making a deductible contribution to superannuation.
From July 1, 2017 the 10% test is no longer applied. This allows those who are fully employed to make personal contributions to super and claim a tax deduction.
The deduction will offset the tax payable on assessable income which also includes the taxable part of a capital gain. It is to be noted that the deductible contribution will be subject to contributions tax in the fund. For higher income earners (generally considered those earning over $250,000) an additional tax of 15% can be incurred.
The person must first be eligible to contribute to superannuation and second, must meet the following criteria to claim a tax deduction:
The contribution is made to the client's own account in a complying fund
The deduction applies in the year in which the contribution is received by the fund trustee
The person cannot create an income tax loss that is carried forward
If a person is turning 75, the contribution must be made on or before the 28th day after the end of the month in which they turn 75
If a child is under 18 at the end of the income year in which they make the contribution they must have derived income from carrying on a business or from activities which causes them to be an employee for SG purposes, and
A valid notice of an intention to claim the deduction must be given in an approved form to the trustee.