For the 2009–10 income year and all future years, your reportable super contributions will affect the income tests for some tax offsets, deductions, concessions, the Medicare levy surcharge, and certain government benefits and obligations.
Read a full explanation of the superannuation contribution changes
Definition of Reportable Superannuation Contribution
Your reportable super contributions are the sum of the following:
- Any personal deductible contributions you may have made
- Any reportable employer super contributions your employer may make for you.
(a) Dependent tax offset
Dependent tax offsets provide tax relief for personal circumstances.
For example, you may be eligible to claim a dependent spouse offset if your adjusted taxable income was $150,000 or less and your spouse’s adjusted taxable income for the year was less than the relevant threshold amount.
(b) The Medicare levy surcharge
The Medicare levy surcharge is a levy that applies to you and your family if your income is above the surcharge threshold for the period during the income year you do not have private patient hospital cover in.
(c) Super co-contributions
On 1 July 2003, super co-contributions were introduced to help low to middle income earners save for their retirement.
If you are eligible and make personal super contributions to a complying super fund or retirement savings account (RSA), the government will match your personal super contribution with a co-contribution up to certain limits.
(d) Deductions for personal super contributions
You can claim personal super contributions as an income tax deduction on your tax return if you meet certain eligibility criteria. As a general rule, you are not entitled to claim an income tax deduction for personal super contributions in an income year where 10% or more of your income comes from your activities as an employee.
(e) Tax offsets for contributions to your spouse’s super
You may be able to claim a tax offset for contributions you make to a super fund or retirement savings account on behalf of your spouse.
You are entitled to a tax offset of up to $540 each financial year if you meet all of the following conditions:
- The sum of your spouse’s assessable income, total reportable fringe benefits and reportable employer super contributions amounts was less than $13,800.
(f) The mature age worker tax offset
The mature age worker tax offset can reduce the amount of tax you are liable to pay. The maximum tax offset is $500.
The mature age worker tax offset is not the same as the senior Australians tax offset or the pensioner tax offset, and some people may be eligible for more than one of these. You include your reportable employer super contributions when working out if you are eligible for this offset.
(g) The Senior Australian Tax offset (SATO)
To be eligible for the SATO, you must meet the age and income requirements. From the 2009–10 income year, the income test for the SATO is your rebate income. For purposes of calculating the rebate income, reportable super contributions are considered.
(h) Compulsory help and financial supplement repayments
If you have an accumulated Help or financial supplement debt, you must start repaying your debt when your repayment income is above the minimum threshold for compulsory repayment.
(i) Non-commercial losses
If you run a business that is making losses, you must meet the income requirement before you can use one of the four non-commercial business loss tests to claim your loss. If you then pass one of the four tests, you can deduct your loss.
You meet the income requirement if your income for non-commercial loss purposes is less than $250,000.
(j) Entrepreneur’s tax offset
If you are an individual who is a sole trader, partner in a small business partnership or beneficiary of a small business trust you will also need to meet the income test. The income test can further reduce your tax offset.
Comment