HONG KONG: The Australian Taxation Office (ATO) has published details on how the Government’s proposed income tax deduction for personal superannuation contributions will work.
The policy was announced as part of the 2016-17 Budget. Legislation to implement the measure was introduced on November 9, 2016.
The ATO has explained that if the legislation is passed, from July 1, 2017, all individuals under the age of 75 will be able to claim an income tax deduction for personal superannuation contributions. These amounts will then count towards an individual’s concessional contributions cap, and will be subject to a 15 percent contributions tax in the fund.
Under the current system, only individuals who derive less than 10 percent of their income from employment sources can claim this deduction.
The ATO said that to access the tax deduction individuals must lodge a notice of their intention to claim the deduction with their superannuation provider. Generally, this notice will need to be lodged before they lodge their income tax return. Individuals can choose how much of their personal superannuation contribution to claim a deduction for.
Individuals will not be eligible to claim a deduction for contributions to certain untaxed and defined benefit superannuation funds.
