Superannuation contributions for employees

Superannuation contributions for employees

One of the positive superannuation changes coming into effect from 1 July 2017 is your ability to claim a tax deduction for personal contributions to superannuation, regardless of your employment arrangements.

Under the current rules, if you earn more than 10% of you total income in your capacity as an employee, you are unable to claim a tax deduction in your own name for personal contributions to superannuation (the 10% rule). In this situation, the only way to make additional tax effective contributions is to instruct your employer to ‘salary sacrifice’ part of your salary to superannuation

This can be administratively cumbersome and unpredictable as:

  1. You are reliant on your employers payroll system to process the salary sacrifice contributions in a timely manner. Employers are only obliged to make these contributions on a quarterly basis (though many will make the payments as part of their monthly payroll) meaning that have the ability to hold onto your money for longer!
  2. Time delays can also cause difficulties if you are trying to target the maximum annual contribution cap (for 2016/17, $30k for under 50s and $35k for over 50s) as a delayed payment will be allocated to the subsequent financial year.
  3. Technically, an employee’s salary sacrificed amount to superannuation satisfies the employers 9.5% compulsory superannuation guarantee contribution which if applied, eliminates the employers obligation and reduces your overall salary package! Whilst not many employers do this, one can never be certain as to how the payroll manager or software system will handle the arrangement when the rubber hits the road.

The 10% rule never made any sense and has now finally been eliminated. This puts control back in your hands to make contributions directly to your superannuation fund and claim a tax deduction in your tax return. Typically, this will be done close to the end of the financial year once you have certainty around the total contributions made by your employer, so you can fill the gap to reach your maximum limit  (which will be reduced to $25,000 for everyone from 1 July 2017).

In order to claim the deduction, there is a specific form  which you need to submit to your superannuation fund, and a copy given to your Accountant when they do your tax return.

DISCLAIMER: The information in this commentary has been provided for publication Adapt Wealth Management (ABN 76 821 231 362 Corporate Authorised Representative of Paragem Pty Ltd AFSL 297276). No Liability is accepted by  Adapt Wealth Management Pty Ltd, its Directors, officers, employees or contractors for any inaccurate or incorrect information. The information is a broad commentary and there is no intention that a client should act on the information without seeking professional assistance from their own advisers (legal, tax, accounting, financial planning) for suitability in respect of their unique circumstances.

About Reuben Zelwer


Reuben Zelwer established Adapt Wealth Management in 2011 to help time poor clients achieve financial freedom. For over 15 years, Reuben has helped professionals, executives, business owner and those approaching retirement make the most of their circumstances by making good financial decisions. Reuben’s professional practice is complemented by substantial voluntary work, which has included setting up financial literacy and savings programs in the local community.