ATO warning over $27,500 superannuation deadline that ends today
But, you might have to fill out a form to ensure you can still make this deduction after July 1 when you lodge your tax return. Financial advisor Nicole Gardner told Yahoo Finance too many people missed this important step.
"Sometimes they put the lump sum contribution in and they think, 'Oh, yep, I've done the right thing there. I've got the tax back'. But you actually need to lodge the form," she said.
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The form you need is the Notice of Intent to Claim (NOI).
Filling it out is a relatively straightforward process, and you need a few details handy, such as your Tax File Number, as well as personal and superannuation information.Gardner said if you were planning on making voluntary super contributions before June 30, you have until the end of the next financial year in mid-2026 to lodge the form.
If you fail to do that, then you won't be able to claim it as a tax deduction.
But, that means if you didn't submit the form for voluntary super contributions last financial year, you have until today to lodge the NOI before the June 30 deadline.
The Stellar Wealth founder and financial advisor explained to Yahoo Finance that lodging the NOI form instructs the Australian Taxation Office (ATO) to treat the contribution as if it came from your pre-tax income.
That would mean it would only be hit with a 15 per cent tax compared to your marginal income tax rate, which could be as high as 47 per cent.
Gardner said you were able to claim back the difference between that 15 per cent rate and your income tax rate.
According to Motley Fool, the average voluntary super contribution for Aussies aged 55 to 59 per year is $5,027.
If someone in that 55 to 59 age bracket was on the top tax rate and they failed to lodge the NOI form, they could miss out on a $1,608 tax break for that year alone.
The financial advisor said the typical person who doesn't lodge an NOI was someone who does a lump sum payment to their super from their bank account rather than through their accountant or adviser.
The ATO sometimes won't be able to discern between a personal contribution and an employer's one, and this form can clear up any confusion.
You can do voluntary superannuation contributions through a salary sacrifice arrangement, which would allow you to skip submitting the NOI form.
This money would be siphoned off from your pre-tax salary and go on top of your employer's contributions without you needing to lift a finger.
You can also make personal contributions like a bank transfer, as well as contributions for your spouse, parents, other family or friends.
There's an annual cap of $30,000 for these concessional contributions, which includes the money paid by your employer.
However, the cap for the 2023-24 year was $27,500, which was increased on July 1 last year.
For example, if you earn $100,000, your employer will have sent $11,500 to your super fund over the 2024-25 financial year.
That allows you to put an extra $18,500 into your super in one year.
If you had unused cap amounts from previous years, you might be able to carry them forward to increase your contribution caps in later years.
While they can be a great way to top up your retirement nest egg, Gardner said it was not always the best place to put your extra money.
"It really depends on what your other goals are because the money's locked away once you put it in there," she said.
"Also, for some people, the tax saving isn't big enough.
"If you're earning less than $45,000 a year, you're on a 16 per cent tax rate, and the tax rate in super is 15 per cent, so there's really not much of a tax saving.
"There's a lot of things to consider, and people should always be getting financial advice before they make any decisions."
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