Super for self-employed people

You don’t have to pay yourself super, but when you retire, you might be glad you did.

You can make regular or lump sum payments, can usually claim a tax deduction on contributions, and may be able to save tax.

Super for self employed people

Why pay yourself super

There are advantages to contributing to super, depending on the type of contribution made:

  • You save for your retirement.

  • You can claim a tax deduction for super contributions.

  • Super contributions are taxed at 15%, so you may save tax depending on your situation.

  • Super investments usually get better returns than bank savings accounts, so your savings will grow faster.

How to pay yourself super

If you already have a super fund, check that you can make contributions when you’re self-employed. You’ll need to give your fund your tax file number (TFN) so they can accept contributions.

Check if moving from employee to self-employed affects the insurance cover through your super. Insurance terms and conditions vary from fund to fund.

Transfer a regular amount or a lump sum

There are two ways to contribute, depending on how you pay yourself. If you receive:

  • A wage — set up a regular transfer into super from your before-tax income.

  • Income from business revenue — transfer a lump sum when you have enough cash flow.

Tax deductions for super contributions

You can claim a tax deduction for contributions you make from your after-tax income (known as personal super contributions).

To claim a tax deduction, you need to send a ‘Notice of intent to claim’ form to your super fund and receive an acknowledgement from your fund.

See claiming deductions for personal super contributions on the Australian Taxation Office (ATO) website for detailed information.

Always confirm the details of any super contributions with your accountant or tax agent.

How much to contribute to super

As a guide, employers contribute at least 10.5% of an employee’s earnings to super.

There are limits to how much you can contribute each financial year:

  • up to $27,500 in concessional contributions (from your pre-tax income, for which you can claim a deduction), and

  • up to $110,000 in non-concessional contributions (from your after-tax income)

The ATO has more information about super contribution caps.

If you’re on a low income, you may be eligible for government super contributions, see super contributions.

Talk to us today if you’re self-employed and would like to start contributing to your super. Call us on 03 9553 0271.

Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/grow-your-super/super-for-self-employed-people

Important note: This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.  Past performance is not a reliable guide to future returns.

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CFP® Dip FP
Authorised Representative 298494
Interprac Financial Planning Pty Ltd 

Darryl Jopling

Senior Adviser

I have worked in the financial services industry since 1982 and as a Financial Adviser since 1999.

I have worked for large Financial Planning businesses, Membership based organisations and looked after the financial planning needs of clients within an Accounting Practice before starting my own business.

I am married, have 4 older children and a grandson and I am keen golfer with mixed results like many .

I have been through many of the strategies I talk with clients about myself and with my family.

I have been through the journey of seeing my parents move into Aged care and negotiated the difficulties and pitfalls of understanding the system for them and this gives me an excellent insight into what is required to assist families at this difficult time.

In a previous roll I used to run retirement seminars looking at Centrelink and Retirement Incomes and how to make these work for you. I have helped many of my clients with Aged Care advice when their parents needed to move into Nursing Homes. For many clients I assist them with superannuation, building wealth and protecting their loved ones with insurance.

I am supported by his, Licensee, Interprac Financial Planning’s in-house resources and ongoing technical, systems and training.

I am committed to understanding your needs and identifying strategies and products to help you achieve your goals.

My guiding principle as an Adviser is to design plans which help to provide my clients with clarity of purpose and the opportunity to build a solid financial foundation.
I will take the time to listen, explain things clearly and keep you informed throughout the advice process.

My experience is complemented by professional qualifications including:

  • Certified Financial PlannerTM Professional
  • Diploma of Financial Planning

At Choice Financial Advice we work with you along the way on life’s journey.

Whether you are getting married, starting a family, embarking on the trip of a lifetime, planning to enjoy your years after work or assisting elderly parents with Aged Care and Nursing Home placements, we can help.