Have you paid your superannuation contributions for the 2020 financial year?

It’s safe to say that most taxpayers enjoy a tax deduction, and the best tax deduction of all is paying concessional contributions into superannuation – this not only saves tax but it also helps to contribute to wealth in retirement.

There are two simple ways of achieving a bigger deduction than usual relating to contribution: 1) bring forward your employees’ June quarter super contributions to be paid before 30 June or 2) topping up your or your family’s concessional contributions to the max cap for the 2020 year. But to be able to claim the tax deduction in the 2020 financial year, the payment will need to be made well before 30 June 2020.

Tax deductible contributions come with an added consideration compared to other tax deductions: the payment must not only be made prior to 30 June 2020, but the super fund must also receive the payment before this date as well. If not, the deduction for the contribution cannot be claimed in the 2020 financial year, and it’s not as simple as transferring the money out of the bank account two days prior to the end of the month.

Instead, the payment must be paid, and reported through your software of choice, well before 30 June 2020. Most clearing houses are advising that the contribution be paid by 23 June 2020 whereas Xero is currently advising that super payments must be submitted by 24 June 2020 through their systems. MYOB hasn’t put forward a date but they warn to make the payment at least 10 business days prior to the payment due date.

Regardless of what system you use to make and report super payments, we would advise that they be paid and reported by 23 June 2020. This ensures that the super fund receives the contribution, and you are able to claim the tax deduction. Any contributions made after this date risk the tax deduction being delayed by 12 months which is a risk every taxpayer should avoid.