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Superannuation for the self-employed


Working for yourself can be liberating, but it also comes with a lot of responsibilities, ones that may have never concerned you as a PAYG employee.

One that is often overlooked by business owners and the self-employed is paying your own super. You may have wondered if sole operators and entrepreneurs need to pay themselves super, and from a legal and tax point of view, there is nothing compelling you to do so. But when you retire, you might be glad you did.

Not making regular contributions to your superannuation may result in financial difficulty later on in life.

Below are some of the advantages to contributing to your super whilst being self-employed.

Reduce your tax bill

Not only is a healthy superannuation balance vital to ensure your comfort in old age, but it could also benefit you financially, right now. Self-employed Australians can contribute up to $25,000 per year in concessional super contributions, which they can claim a tax deduction for.

You can also contribute an additional $100,000 per year in non-concessional super payments.

Government superannuation co-contribution

 The Australian Government offers an initiative that supports low- and middle-income earners to help boost their super contributions.

The Government will match a certain amount of contributions you make to your super. There are some eligibility criteria business owners need to meet, so the super co-contributions may only apply to growing businesses.

If you have a yearly income of less than $53,564 (before tax), and you meet the eligibility criteria, the Government will match 50 cents for every $1 that you add to your super from your after-tax income up to a maximum.

The co-contribution gets paid directly into your super account after you’ve lodged your tax return for that year, proving your income. 

How can you fit super into your budget?

You can choose to either make regular or lump sum contributions, and in order to do so you will need to free up some cash flow in the business budget.

You can do this by either growing your incoming revenue or cutting back on some outgoing expenses and redirecting this money into your super.

Areas where most business owners can find savings include gas and electricity bills, insurance premiums and business loans. The team at Morris Finance can help you refinance or consolidate your business loans, so you are able to begin contributing your desired amount into superannuation – and pave the way towards a financially free future.

How much should you contribute?

Currently, Australian employers are required to pay their staff a minimum 9.5% superannuation. You could adopt this approach, and deposit 9.5% of your earnings into your chosen super fund.

Another alternative could be to speak with your financial adviser and discuss how much money you would like to have accumulated when you retire, and then work backwards to determine how much you should be contributing to reach that goal.

If you’re self-employed, consider your retirement needs and understand how paying yourself super could benefit you – and your business.

Looking to boost your retirement fund with some strategic investments? Contact our expert team on (03) 5223 3453 to find out how we can help you.