Superannuation Tax Deduction in Australia: Criteria, Limitations and How to Claim

This guide will explain how a tax deduction from superannuation works, what the advantages are, and which requirements you must fulfil to claim it under current 2025–26 Australian superannuation and income tax rules.

What Are Superannuation Tax Deductions And How Do They Work?

A superannuation tax deduction is a reduction of your Australian assessable income based on eligible personal contributions paid into a complying superannuation fund. Personal contributions are voluntary contributions that individuals can make to enhance their retirement savings further.

To make a personal contribution to your super fund, you pay the desired sum from your net income.

Note that your taxable income will not be automatically reduced—you must lodge a valid Notice of Intent to claim a deduction with your super fund and receive an acknowledgement before reporting the deduction in your tax return if you wish to use the contributed sum to reduce taxable income.

After claiming the deduction, the contribution you made will be treated as a concessional contribution for tax and contribution cap purposes, even though you used after-tax funds initially. It will then be taxed within the super fund at 15% (or 30% if Division 293 tax applies).

If you don’t claim a personal superannuation contribution deduction, your contributions will be considered non-concessional (post-tax).

They will not be taxed again when contributed, although investment earnings in the fund are taxed during the accumulation phase and withdrawal tax may apply depending on your age and the taxable component.

Which Contributions Are Not Tax-Deductible?

Contributions for which super account holders cannot receive a superannuation tax deduction include:

• Mandatory contributions your employer makes (including Superannuation Guarantee (SG) contributions).
• Amounts that you instruct your employer to deduct from your gross salary and contribute to your super (salary sacrifice contributions, which are already concessional).
• Additional contributions your employer makes to your super, such as annual bonuses and amounts above the superannuation guarantee (SG).
• Funds rolled over from another super fund, or transfers from foreign retirement savings accounts.
• The first home super saver (FHSS) sums that were re-contributed to a super.
• Downsizer contributions.
• Re-contribution of COVID-19 early release of superannuation amounts.
• Amounts you contribute to your spouse’s super.

Additionally, in order for personal contributions to be eligible for a tax deduction, they cannot be made to:

1. A Commonwealth public sector super scheme with a defined benefit interest.
2. An untaxed fund, such as a constitutionally protected fund (CPF).
3. A super fund that has notified the Australian Tax Office (ATO) that contributions to a defined benefit interest are not deductible.

If you are a business owner, you may also reduce your taxable business income by claiming deductions for contributions you make to your employees’ super funds.

That includes the super guarantee and salary sacrifice contributions, provided they are paid by the relevant quarterly due dates to be deductible.

Are Superannuation Fees Tax Deductible?

In general, the fees you pay to your superannuation fund cannot be used as personal tax deductions. That applies to most superannuation fees, such as investment costs, transaction fees, or brokerage fees, which are typically deducted from the returns your super fund receives from investments.

However, super funds themselves may claim tax deductions for certain expenses, which can reduce the fund’s taxable income. This benefit is reflected in overall fund returns rather than as a direct 15% credit to your account.

Who Can Claim Superannuation Tax Deduction?

Making personal super contributions is possible regardless of residency status. However, to benefit from a tax deduction you must have Australian assessable income in that income year.

This means that expats with tax obligations towards Australia may use their personal contributions to claim a superannuation tax deduction, provided they meet the following conditions:

• Age criteria.
• Work test requirements (where applicable).
• Concessional contribution cap limits (currently $30,000 for 2025–26, including employer contributions).

Age Criteria for Claiming Superannuation Tax Deduction

Individuals between 18 and 67 are only required to comply with the contribution caps and the rules regarding eligible contributions and super funds. Super contributors outside of this age group must fulfil additional criteria:

Work Test for Superannuation Tax Deductions

The criteria for passing the work test include working a minimum of 40 hours in a consecutive 30-day period in a tax year. Individuals who don’t satisfy the work test criteria may still claim a tax deduction, provided they are eligible for a work test exemption:

1. They passed the work test in the year prior to the one for which they wish to claim a deduction.
2. Their total superannuation balance was under $300,000 at the end of the previous 30 June.
3. They have not previously used the work test exemption.

How Much Tax Is Deducted?

When reporting the deduction on a tax return, you may opt for claiming the entire amount of your personal contributions or only a portion of it. The tax saving will depend on your marginal income tax rate, which depends on the tax bracket your reduced income falls in.

Australian residents are taxed at a progressive rate based on their assessable income, as shown below for the 2025–26 tax year (excluding Medicare levy):

If your income for the tax year 2025–26 is $142,000, your total personal contributions are $10,000, and you claim a tax deduction on half of those contributions, your assessable income for that tax year will be reduced to $137,000. Your tax obligation on $137,000 will equal $32,028 (excluding Medicare levy).

Additionally, your super fund will deduct 15% contributions tax on the $5,000 concessional portion ($750). The full $10,000 remains invested in your super account, but $750 is remitted by the fund as tax.

If you claim a tax deduction for the entire $10,000, you will reduce your taxable income to $132,000. This remains within the 37% marginal tax bracket, but reduces the amount taxed at that rate. In this case, your tax liability (excluding Medicare levy) will be $30,178. The fund will deduct 15% contributions tax on the full $10,000 ($1,500).

For comparison, you would be charged $33,878 in income tax (excluding Medicare levy) if you do not claim any deduction, and the $10,000 would remain entirely non-concessional.

Benefits of Superannuation Tax Deductions

Claiming tax deduction on super contributions reduces your assessable income, which is beneficial for two reasons:

1. Lower taxes: Lower income incurs less tax, and if the deduction is high enough, it may reduce the amount of income taxed at your highest marginal rate. Additionally, contributions on which a deduction was claimed will be treated as concessional contributions and taxed within the super fund at a flat 15% rate, unless Division 293 tax applies, which increases the effective tax rate on some or all concessional contributions to 30% for higher-income earners.
2. Government incentives: If your adjusted taxable income is $37,000 or less for the 2025–26 tax year and you have concessional contributions (including employer contributions or deductible personal superannuation contributions), you may be eligible for the low income super tax offset (LISTO)—a tax refund amounting to 15% of concessional contributions, up to $500. Eligibility is based on adjusted taxable income rather than taxable income alone.

Limitations of Superannuation Tax Deduction

When claiming superannuation tax deductions, it’s advisable to consider:

1. Caps on contributions
2. Division 293 tax
3. Eligibility for super co-contributions

Caps on Contributions

The limit for concessional contributions is $30,000 per tax year (2025–26). All concessional contributions count towards the limit. If you hold multiple super funds, the limit applies to the combined amount of contributions paid.

If your total super balance was below $500,000 on 30 June of the previous financial year, you may be eligible to carry forward unused concessional cap amounts from the previous five financial years.

Since the personal contributions on which you claimed a tax deduction are treated as concessional contributions, they also count towards the cap. Exceeding this cap results in adding the excess concessional contributions (ECC) to your assessable income, subjecting them to your marginal tax rate. However, the tax payable on ECC is reduced by a 15% tax offset to reflect the contributions tax already paid by the fund.

You may elect to release up to 85% of excess concessional contributions. This will not prevent them from being taxed as income, but it is generally recommended because unreleased excess concessional contributions count towards your non-concessional contribution cap.

For the 2025–26 tax year, the annual non-concessional contribution cap is $120,000. Individuals under age 75 may be eligible to trigger the bring-forward rule, allowing up to $360,000 over a three-year period, subject to total super balance thresholds.

If you exceed the non-concessional contribution cap and do not release the excess amount, you will be taxed on the excess at the highest marginal tax rate (45%) plus Medicare levy (2%). Alternatively, you can elect to release the excess non-concessional contributions and 85% of the associated earnings to avoid the excess contributions tax outcome.

Division 293 Tax

If the sum of your assessable income and concessional contributions is greater than $250,000, you may be liable for Division 293 tax.

Division 293 income includes taxable income, concessional contributions, reportable fringe benefits, total net investment losses and certain other adjustments.

Division 293 tax is an additional 15% tax paid on the lower of:

• Your concessional contributions, or
• The amount by which your Division 293 income exceeds $250,000.

For instance, if your income is $245,000 and total concessional contributions made to your super are $10,000 (bringing your Division 293 income to $255,000), you will pay 15% on the $5,000 exceeding the threshold. However, if your Division 293 income is $275,000, with $260,000 in taxable income and $15,000 in concessional contributions, you will pay 15% on the full $15,000 of concessional contributions.

Eligibility for Super Co-Contributions

Turning your non-concessional contributions into concessional contributions by claiming super tax deductions on them will make those contributions ineligible for the government’s co-contribution, as the scheme only applies to eligible personal non-concessional contributions.

The government match (50% of your eligible personal non-concessional contributions, up to $500) is only available for non-concessional contributions, provided your total income is below the upper threshold of $60,400 for 2025–26.

The maximum co-contribution applies at lower income levels and phases out once total income exceeds the lower threshold (currently $45,400 for 2025–26). Eligibility is based on total income rather than taxable income alone.

How To Claim Tax Deduction for Superannuation Contributions?

The steps for claiming a superannuation contribution tax deduction are as follows:

1. Notifying your superannuation fund
2. Receiving an approval from the fund
3. Filing a tax return

Notifying Your Superannuation Fund

You must file a notice of intent to claim a deduction for personal superannuation contributions. You may use the approved ATO form (NAT 71121) or your fund’s equivalent form. The deadline for submitting the notice of intent is either the day you file your tax return for the year in which the contributions were made or the end of the following income year—whichever is earlier.

The notice must include:

• Your details
• Super fund details
• Contribution details
• Declaration of intent

Receiving an Approval From the Fund

Before claiming a deduction on your tax return, you must receive a written acknowledgement from your fund confirming that the notice is valid.

A valid notice must meet the following criteria:

• You must still be a member of the fund you submitted the notice to.
• The fund must still hold the contributions in question. If you have rolled over the entire or part of your super balance, the notice can only apply to the amount that remained in the fund at the time the notice is given.
• The notice cannot include an amount already included in a previous notice, released under the first home super saver (FHSS) scheme, or previously claimed as a deduction.
• You must not have started receiving an income stream based in whole or in part on the contribution.
• You must not have lodged a contributions splitting application for the contribution in question.

After your fund acknowledges your notice, you generally cannot revoke it. However, you may lodge a variation notice to reduce the amount stated in the original notice, provided you remain within the statutory time limits.

Filing a Tax Return

Once you have submitted your notice and it has been acknowledged, you can complete your tax return. The contribution amount for which you are claiming a deduction must be the same amount stated in your valid notice of intent.

If you are lodging your tax return through the myTax portal, use the “Personal super contributions” label to claim the deduction. When submitting a paper return, use the “Personal superannuation contributions” section in the Individual tax return supplement.