So, you have made a personal superannuation contribution to your superannuation fund during the year and want to claim it as tax deduction when you lodge your income tax return.
To do this you must complete a specific form called a Notice of Intent.
It doesn’t matter whether the personal superannuation contribution has been made to an Industry, Retail for Self-Managed Superannuation Fund, the rules are the same.
But a Notice of Intent (NOI) is more complex than many people realise and can cost you and your superannuation fund balance thousands of dollars if not done correctly.
A Notice of Intent (NOI) for superannuation contribution purposes is a formal declaration submitted by an individual to their superannuation fund. It is used to indicate the individual’s intention to claim a tax deduction for personal contributions made to their superannuation fund.
When an individual makes a personal contribution to their super fund, it is initially treated as an after-tax contribution. However, if they meet certain criteria, they may be eligible to claim a tax deduction for that contribution. To do so, they must lodge a valid NOI with their superannuation fund, notifying them of their intention to claim a deduction for the contribution.
The NOI serves as a formal record and evidence of the individual’s intention to claim a tax deduction. It is an important step in the process of maximising the tax benefits associated with personal superannuation contributions.
And because all tax-deductible contributions have 15% tax levied on them, the Trustees of your superannuation fund are then notified via this document to withhold the tax on your personal superannuation contributions and forward that tax on to the ATO.
The NOI must be lodged within specific timeframes, typically before the individual’s tax return is lodged or, if the tax return is not lodged by the end of the following financial year, before that deadline.
Failing to lodge a valid NOI within the required timeframe may result in the individual being unable to claim the tax deduction for their personal superannuation contributions.
Before you lodge your tax return to claim your personal superannuation contributions as a tax deduction there is one crucial thing you need to do.
You must wait until you have received the acknowledgement notice from the fund, confirming that the NOI has been received.
Without this, there is no evidence that your superannuation fund is aware that you intend to claim those contributions as a tax deduction and withhold 15% tax from them and pass it onto the ATO.
One common error we’ve seen is when advisors recommend customers make a personal contribution to their fund, intending to claim a deduction for part or all of it. However, since the customers taxable income is unknown at that point, they wait for their accountant to confirm the level of taxable income before submitting the NOI to the fund. Unfortunately, the accountant may unknowingly lodge the tax return without being aware of the customer’s intention to claim the deduction.
By the time the tax return is lodged, it’s too late for the customer to submit a valid NOI to the fund.
In such cases, there is simply no way to claim the personal contribution as a deduction. The tax law doesn’t provide any discretion to the ATO or the fund in this situation.
Communication and coordination are key. It’s essential for advisors and accountants to work together closely, ensuring that everyone is aligned and fully aware of the customers intentions. This way, potential issues can be addressed early on, avoiding the disappointment of missing out on valuable tax deductions.
Therefore, in summary:
- Make sure you have clearly made your intentions known to your accountant about claiming your personal superannuation contributions as a tax deduction on the tax return.
- Lodged your Notice of Intent within specific timeframes, typically before you lodge your tax return or, if the tax return is not lodged by the end of the following financial year, before that deadline; and
- Wait until you have received the acknowledgement notice from the fund, confirming that the NOI has been received BEFORE you lodge your tax return.
Remember, attention to detail and timely action can save you from costly mistakes. Stay informed and get professional advice to ensure your NOI is submitted correctly and within the required timeframes.
Have a great day!
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