Australia: Personal deductible contributions – Getting it right

Last Updated: 21 April 2012
Article by Andrew O'Bryan, Rebecca James and Mark Payne

With excess contributions tax assessments on the rise, this update is a timely reminder of the requirements that need to be satisfied to make a concessional contribution to superannuation.

Importantly, a self employed individual will need to ensure they are within the employment earnings threshold of 10% and a notice of intent is provided to the fund. Further, the self employed individual must have derived sufficient assessable income to claim a deduction.

In this update we also discuss some tricks and traps to keep in mind when claiming a deduction for contributions made in mid June but allocated in July and timing issues on when a contribution is deemed to have been received by a fund trustee.

Complying with the formalities

With 30 June fast approaching, self employed or substantially self employed individuals looking to make a concessional contribution to superannuation should ensure they strictly comply with the formalities:

  • in respect of being eligible to make a contribution; and
  • to ensure they are entitled to a deduction.

Keep in mind that once an individual reaches age 65 they must satisfy the work test to be eligible to contribute to superannuation, meaning that they must be gainfully employed for at least 40 hours within a 30 day period in the relevant financial year.

First, self employed individuals should ensure that any assessable income, reportable fringe benefits and reportable superannuation contributions received as an employee is less than 10% of their total assessable income.

Second, a notice of intent to deduct a contribution in the approved form must have been provided to the fund trustee on the earlier of:

  • the date the individual lodges their tax return; or
  • the end of the next income year.

Importantly, the notice will not be valid if the fund trustee has commenced to pay the individual an income stream or the individual made an income splitting application before providing the notice.

The fund trustee must also provide the self employed individual with an acknowledgement of receipt of the valid notice to deduct the contribution.

To be 'gainfully employed', an individual must be employed or self-employed for gain or reward in any business, trade, profession, vocation, calling, occupation or employment. 'Gain or reward' means receiving remuneration such as wages, business income, bonuses and commission for personal exertion. It does not include the passive receipt of income, such as dividends.

Excess contributions

It is important that self employed individuals carefully monitor their concessional contributions to ensure they do not exceed their applicable concessional contribution cap.

Another trap for the unwary is where the deduction for the concessional contribution exceeds the self employed individual's assessable income. In this circumstance, the relevant proportion of the concessional contribution will be deemed to be a non-concessional contribution and will count against the individuals non-concessional contribution cap. This could result in the individual exceeding their non-concessional contribution cap and being subject to an excess contributions tax liability.

Timing of the deduction

In ATO ID 2012/16, the Commissioner of Taxation confirmed that a concessional contribution made to a superannuation fund in the current financial year and allocated to the relevant member account in the subsequent financial year in accordance with the superannuation law, is:

  • deductible to the member in the current financial year (subject to complying with the deductibility requirements); and
  • counted against the member's concessional contribution cap in the year it is allocated.

Therefore, a concessional contribution of $25,000 (or $50,000 for a member age 50 or more) can be made in mid June 2012 in addition to concessional contributions up to the cap already made during the 2012 income year and a deduction for the total amount of up to $50,000 (or $100,000) claimed in the 2012 income year.

Importantly, the fund deed must permit contributions to be allocated in accordance with superannuation law, being 28 days after the contribution is received by the trustee. If not, the member will breach the concessional contribution cap and incur an excess contributions tax liability.

If the member maximises their contributions as set out above, they cannot make any further concessional contributions in the 2013 income year without incurring an excess contributions tax liability.

When is the contribution received by the fund trustee?

In Chantrell and Commissioner of Taxation [2012] AATA 179, the Administrative Appeals Tribunal held that an electronic funds transfer to a superannuation fund made on Saturday 30 June 2007 and credited to the superannuation fund's account on Monday 2 July 2008, was made in the 2008 income year.

In this case, the Administrative Appeals Tribunal declined to make a determination that the excess contributions tax that arose because of this transaction should be disregarded or allocated to another income year as the facts did not give rise to special circumstances.
The Commissioner of Taxation relied on Taxation Ruling TR2010/1 in asserting that the contribution was not made until the funds were credited to the fund trustee's account.

In contrast, TR 2010/1 states that a cheque is received by the fund trustee when it is provided to the fund trustee, subject to the cheque being cashed within 3 business days and the cheque not being subsequently dishonoured when the presented to the bank.

Therefore, given 30 June 2012 falls on a Saturday, it would be prudent to make all contributions by way of cheque by 29 June 2012.

Before 30 June 2012

Given the increasing number of excess contributions tax assessments being raised by the Commissioner, we recommend checking whether the formal requirements for making a deductible contribution have been complied with and then checking them again. ?

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.