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Bookkeeping - Payroll – Super for self-employed – What is due?
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Published on Thursday, 16 July 2015 14:46
For sole traders and self-employed, that do not have a company (with a company, super is compulsory when directors pay themselves) many want to know about super for the self-employed – what is due - do they have an obligation to pay super?
The ATO website guidance is “If you're a sole trader or in a partnership, you don't, as an employer, have to make super guarantee (SG) payments for yourself.”- see detail below
It would be wise to be putting super away just as if you were employed, otherwise if you hope that selling your business will be your super, you take several risks –
- All your “eggs” are in one basket,
- Your industry may not be viable when you want to sell,
- You may not be able to build the business to the value you want to sell for,
- You will also miss out on the very generous tax concessions of super, such as tax free pension after 60 YO (or reaching preservation age)
From the ATO Website -
The self-employed
If you're a sole trader or in a partnership, you don't as an employer have to make super guarantee (SG) payments for yourself.
But you may want to make personal contributions to super as a way of saving for your retirement.
Most self-employed people can claim a full deduction for contributions they make to their super until they turn 75. Keep in mind that contributions you make may attract extra tax if they exceed the contributions limit for that year.
You may also be eligible for the super co-contribution payment. This helps eligible low-to-middle income earners save for their retirement. If you're eligible and you make personal super contributions, the government will match your contribution up to certain limits, unless you have claimed your contribution as a tax deduction.
Make sure your super fund has your tax file number (TFN). If it doesn't:
- Your super contributions will be taxed an additional 34%
- Your fund won't be able to accept personal contributions from you, which means you may miss out on any super co-contribution you're eligible for
- It will be harder to keep track of your super.
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