Avoid this trap when making super contributions
The Importance of Submitting a Valid Notice of Intent Form for Personal Superannuation Contributions
Oh the joy to see the sun shining, the beaches golden, and you are waking up in the retirement spot of your dreams! Look, we get it, talking about saving for that retirement isn't exactly thrilling, but with some careful planning, you could be on track to live out your golden years in style. This blog post is all about how you can level up your savings game while securing some great tax deductions. So keep reading...
One vital thing you need to do
Making personal contributions to your super fund can be a great way to boost your retirement savings. Did you know that these contributions can often also be claimed as a tax deduction, saving you some of that hard-earned cash? If that’s the path you want to follow, it is important to submit a valid ATO Notice of Intent to Claim form to your super fund as soon as possible after making any personal contributions.
Once you’ve located the form online, make sure you include the correct amount and date of the contribution and send it off to your super fund right away. If you miss this step, you risk missing out on that all-important tax deduction. And let's face it, no one likes giving money to the ATO unnecessarily.
But wait, there's more. If you have money transferred from your super fund to an insurance company each year in the form of a rollover or partial rollover to cover insurance premiums, you will also need to have the Notice of Intent to Claim form processed beforehand if you'd like to claim a tax deduction.
Why is this? Well, when you roll over your superannuation balance, you are effectively transferring your money from one fund to another. As a result, a portion of the contributions you made to the original fund will no longer be associated with your account and you will not be able to claim the full amount as a tax deduction. So our advice? Make sure you've sent off the form before you start moving funds around.
3 essential steps for claiming personal contributions as tax deductions
Step 1: Complete a Notice of Intent to Claim form
To claim personal contributions to your super fund as a tax deduction, fill out a valid Notice of Intent to Claim form. You will need to provide details of your contributions, including the amount, date, and super fund they were made to. You can find the form on the ATO (Australian Taxation Office) website here. Once completed, the form will need to be sent to your super fund for processing. They will then lodge this information with the ATO.
Step 2: Confirm processing of Notice of Intent to Claim form
After submitting the Notice of Intent to Claim form, you must receive confirmation from your super fund that it has been processed before making any rollovers or partial rollovers of your superannuation balance. This will ensure that you can claim any personal contributions you made before the rollover as a tax deduction.
Step 3: Avoid rollovers or partial rollovers before confirmation
If you make a rollover or partial rollover (including it being automatically completed on your behalf by an insurer) before receiving confirmation the Notice of Intent to Claim form has been processed, you may no longer be able to claim the tax deduction for some or all of the personal contributions made before the rollover. Therefore, it is essential to avoid moving funds around before confirming the super fund has processed the form.
Let’s look at this case study
On the 3rd of August, Deanna decides she would like to make a contribution to her super fund for the amount of $500. She transfers this money into her superfund as a non-concessional (after-tax) contribution by using the personalised BPAY details that are outlined on her superannuation statement and listed on her super fund’s online portal.
Prior to doing so, Deanna consulted with her accountant and confirmed that she had not yet exceeded her concessional contribution cap. As such, she decides she’d like to claim this entire $500 contribution as a tax deduction at the end of financial year. She does so by first completing an ATO notice of intent to claim form, and then sending this to her superfund, converting that $500 into what is called a concessional (before-tax) contribution.
On the 6th of August, her super fund sends her an email to confirm that her notice to claim a tax deduction has been processed.
Previously, Deanna had taken out life, TPD, income protection and trauma insurances through her financial adviser. Some of these insurance covers are paid for from her super fund each year.
Next month, on the 14th of September, Deanna’s insurance premiums are due. Her super fund sends the $2,316 to her insurance company as a partial rollover of her superannuation balance to pay for this insurance premium.
As Deanna had received confirmation that her intent to claim had been processed on the 6th of August, prior to her premium being rolled over from her super on the 14th of September, her $500 is fully tax deductible come tax time.
IMPORTANT TO NOTE: Had she not submitted this form and received notification that it had been processed before her insurance premium was paid, the $500 payment she made to her fund on the 3rd of August would no longer be fully claimable as a tax deduction.
Attention all you savvy retirement savers!
If you want to give your superannuation balance a boost, consider making personal contributions to your super fund. However, make sure you fill out a form to let your superfund know once you have done this. That way, you can claim all your contributions as a tax deduction and get the most out of your retirement savings.
And oh, don't forget to chat with your financial adviser to see how this applies to your situation. We all need a little help to retire in style!
Read more information here: https://www.ato.gov.au/forms/notice-of-intent-to-claim-or-vary-a-deduction-for-personal-super-contributions/?page=7