SMSF Double Deductions

SMSF Double Deductions


The Editor is also the Founder of The Passive Investor website. He is a part-time practising General Practitioner (GP) with an interest in all financial and investment-related topics. He is particularly focused on the integrated use of residential property, commercial property and the sharemarket to develop effective financial strategies for wealth accumulation and distribution.

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We recently read about the self-managed super fund (SMSF) double deduction strategy for people eligible to make personal deductible super contributions.

In this strategy you can effectively double your tax-deductible (concessional) contribution limit within the current financial year.

So instead of the usual $25,000 limit, you can deduct up to $50,000 against your income.

This is done by “bringing-forward” the $25,000 contribution for the next financial year into the current financial year.

In order to do this you need to make the first $25,000 contribution anytime up until the end of the current financial year (30 June 2013) as per usual, and the second $25,000 contribution can only be made in the month of June 2013.

This strategy is useful if you have higher than usual taxable income in the current financial year, eg. due to sale of investments resulting in capital gains, and also particularly if the extra deductions will put you into a lower tax bracket.

However, doing this does mean you use up your $25,000 tax-deductible contribution limit for the next financial year.

Furthermore, it is important to be aware that if you take on any salaried work in the next financial year you will also receive your employer’s compulsory 9% super payments which could take you over the $25,000 contribution limit and result in you incurring excess super contributions tax.

Here are a couple of articles from other websites that explains this strategy in more detail:

Money Management article on SMSF Double Deductions

The SMSF Review article on SMSF Double Deductions

We strongly suggest you run this strategy by your accountant before implementing it.

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