What is the current concessional superannuation contributions cap?
The concessional contributions cap for 2023/24 is $27,500 and the non concessional contribution cap is $110,000.
The concessional contributions cap for 2024/25 is $30,000 and the non concessional contribution cap is $120,000.
Contributions over the cap amount are subject to extra tax. This extra tax is called the excess concessional contributions tax.
All concessional contributions to all of your super funds in a financial year are counted toward the concessional contributions cap. If you have a defined benefit super interest, notional contributions are also counted towards the cap.
If you have a residential rental property are you claiming a building write off?
You can only claim a deduction for the capital works on residential rental properties you built after 17July 1985.
If you own a rental property, you may be able to claim a deduction (usually at the rate of 2.5% per year in the 40 years following construction) for the construction cost of:
- buildings
- extensions, such as a garage or patio
- alterations, such as adding an internal wall, kitchen renovations or bathroom makeovers
- structural improvements – such as a gazebo, carport, sealed driveway, retaining wall or fence.
If you carried out the construction or contracted a builder to do so, you should make sure you keep detailed records of the construction costs.
If you purchased the property and do not have a record of the construction costs – for example, where the vendor did not provide them – you will need to obtain this information from an appropriately qualified person such as a quantity surveyor.
Interest Deductions on Loans used for mixed use
Interest can only be claimed as a tax deduction when the funds borrowed are used for income producing purposes, that is to buy a rental property or shares, etc.
It is common practice for financial institutions to offer redraw facilities against existing loans. This leads borrowers to draw down against the loan for other purposes, which may or may not be income producing.
Example: Phillip borrows $250,000 to buy a rental property. After 5 years the loan has reduced down to $120,000, the bank notes Phillip’s good repayment record and offers him to re-borrow against the house for other purposes. Phillip does so and draws $50,000 for a car for private purposes. The loan is now at $170,000.
Phillip wants to claim a tax deduction for all of the interest, however Phillip can only claim interest on the $120,000 because the $50,000 was used for private purposes. Any future interest paid can only be claimed on a proportionate basis of 70% being the amount relating to an income producing asset over the total amount of the loan (120,000/170,000).
