# Self Employment and Superannuation



## Pager (22 April 2009)

Anyone hear know if its possible to claim super contributions if your self employed ?

I have not made any contributions since becoming self employed about 18 months ago but maybe i should , only thing is from what i can see there is no incentive unless I'm on a low income which I'm not.

Am i missing something and should i be contributing, unless its tax effective TBH i cant see the point, my income is mainly from trading so i would rather have money in my trading account than parked long term in super.

Any advice welcome


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## glenn_r (22 April 2009)

It may depend on your business structure.

In my case I'm self employed as an employee of my own company, thus by law I must contribute 9% of my gross salary to super and also pay workers compensation insurance as well.


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## Trembling Hand (22 April 2009)

Pager said:


> Anyone hear know if its possible to claim super contributions if your self employed ?
> 
> Am i missing something and should i be contributing, unless its tax effective TBH i cant see the point, my income is mainly from trading so i would rather have money in my trading account than parked long term in super.



You need to talk to a accountant of course but if you are trading as a sole trader/partnership there is no requirement to pay super. But as Glenn has pointed out if you are set up as a company and pay yourself a wage then you will have to pay super.

And I agree. is there anything sillier than a trader having to pay super. Sh!ts me to tears.


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## Pager (22 April 2009)

Seems a shame and a concern that anyone self employed may well end up with little or no super as there seems no incentive or requirement to contribute.

Maybe not so bad for me as i derive my income from the markets but for your average tradesmen or shop/small business owner who is set up as a sole trader its just another thing stacked against you.

Mind you, theres no guarantees as a trader so having money put away you cant touch may also be a good thing.


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## Aussiest (22 April 2009)

Perhaps you could throw $100.00 per week into a high earning interest account? Bank West has one, which i am told is currently at 5%. Just an idea. Then, when you get enough, but an investment property - that is your super!


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## Julia (22 April 2009)

Might as well have the government co-contribution:  put $1000 into super and they add $1500.


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## tommymac (22 April 2009)

Pager said:


> Anyone hear know if its possible to claim super contributions if your self employed ?
> 
> I have not made any contributions since becoming self employed about 18 months ago but maybe i should , only thing is from what i can see there is no incentive unless I'm on a low income which I'm not.
> 
> ...




If you are self-employed (as opposed to employed as others have mentioned) you can receive deductions for super contributions.

The maximum concessional super contributions, (as opposed to taxation deductions) is $50,000 if you are below the age of 50 and $100,000 if you're over 50 (but only until 30 June 2012).

The reason I say concessional super conts as opposed to tax deductions is that if anyone else has made concessional contributions on your behalf, these contributions will reduce your limit that you can concessional contribution limit.

This is advice is only general in nature and you should speak to your accountant regarding your specific situation.


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## awg (22 April 2009)

The greatest benefit that can be derived from super is a reduced tax environment.

I have a SMSF pension, and my trading is done within that structure, so almost no tax

The benefits are not as great if you are in the contribution phase.

However, over time may be significant.

It is of concern that the legislative goalposts may move, but in the longterm super should continue to receive favorable treatment because it saves the Govt $ in age pension


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## robots (22 April 2009)

Pager said:


> Anyone hear know if its possible to claim super contributions if your self employed ?
> 
> I have not made any contributions since becoming self employed about 18 months ago but maybe i should , only thing is from what i can see there is no incentive unless I'm on a low income which I'm not.
> 
> ...




hello,

great topic Pager which will become a huge issue in 15-20yrs when "contractors" realise not much to retire on as they have not been part of the superannuation scheme

you can claim direct tax deduction, so:

if personal income is say $80,000 pa

then you make super contribution of $7,000 pa 

your personal income is now $73,000 pa and taxed accordingly,

but still taxed at 15% on entry into fund environment, so instead of paying 30% you paying 15%,

can also get co-contribution up to certain income, all needs to be placed prior to 1st July of course,

for people in the "contracting" scene you need to negotiate your rates well

thankyou
robots


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## Pager (26 April 2009)

Thanks to those who have replied

Ive been told that given my age i can contribute up to $50K to my super (for those over 50 its currently $100K) this year, know i realise my accountant could probably answer this but every time i ask a question the meter starts running  , as if i don't pay enough what with BAS every bloody quarter, instalment tax etc etc 

Robots, your post seems to indicate the amount you contribute that could be claimed against tax is based on how much you earn, so if i earn $60K i can contribute about $5400 or 9% and claim this as a tax deduction ? but if i contribute more its not tax effective ?, the main problem here is most self employed dont really know this figure until the end of june, particualy someone like me who is a trader !.

How does this contribution work ?, if i do the maximum of $50K does is this deductible against my income ?, that is say i make $100K, pay $50K into super does that mean my taxable income is now $50K ?, if i earn $60K and contribute $50K is my taxable income now $10K ?.

Cheers

Pager


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## robots (26 April 2009)

Pager said:


> Thanks to those who have replied
> 
> Ive been told that given my age i can contribute up to $50K to my super (for those over 50 its currently $100K) this year, know i realise my accountant could probably answer this but every time i ask a question the meter starts running  , as if i don't pay enough what with BAS every bloody quarter, instalment tax etc etc
> 
> ...




hello,

i used 9% in the example as that is what employer compulsory contributions are,

yes for self-employed this going to be a huge issue, its has to be sent in b4 1st July

when you make contribution the Super fund will send you a form asking for details on amounts you are claiming for tax deductions and this will then go to ATO records

contributions are more effective for high income earners and not so good for low income earners as dont forget you still pay 15% contributions tax on entry to fund

yes, if you earn 100k send 50k to super you only taxed on 50k so the ATO website is a good place for calculators to see the difference keeping in mind you still pay 15% on entry to fund

if doing quarterly BAS, tax payments you basically getting that money back

thankyou
robots


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## robots (26 April 2009)

hello,

pager, on  a side not

as a trader are people typically GST registered?

and further to this how is turnover calculated?

and at what point is GST charged?

thankyou
robots


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## Pager (26 April 2009)

robots said:


> hello,
> 
> pager, on  a side not
> 
> ...




Hi Robots

I'm registered for GST, i don't charge any as im not selling or charging anything but i pay it on brokerage and it does mount up so i claim it back each quarter, not sure how it all works but i have to give my accountant all my statements each month to work out the turnover bit.

cheers

Pager


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## tech/a (26 April 2009)

tommymac said:


> If you are self-employed (as opposed to employed as others have mentioned) you can receive deductions for super contributions.
> 
> The maximum concessional super contributions, (as opposed to taxation deductions) is $50,000 if you are below the age of 50 and $100,000 if you're over 50 (but only until 30 June 2012).
> 
> ...





There in lies the answer if your business is profitable.
Find any way you can to take advantage of this.


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## robots (26 April 2009)

Pager said:


> Hi Robots
> 
> I'm registered for GST, i don't charge any as im not selling or charging anything but i pay it on brokerage and it does mount up so i claim it back each quarter, not sure how it all works but i have to give my accountant all my statements each month to work out the turnover bit.
> 
> ...




hello,

people need to remember GST is a zero benefit tax, it is purely a tax collection service 

that was the reason i asked those questions, if you dont charge GST then the GST is pointless and therefore I believe the whole BAS for you may be pointless, we talking basically you are a trader here with not much else going on BAS statement

i guess the accountant gets all your forms sent to him/her? and then says right Pager you need to pay X tax this quarter but doesnt give you too much of breakdown?

thankyou
robots


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## Trembling Hand (26 April 2009)

robots said:


> that was the reason i asked those questions, if you dont charge GST then the GST is pointless and therefore I believe the whole BAS for you may be pointless, we talking basically you are a trader here with not much else going on BAS statement




No, we pay GST on brokerage as well as other services therefore the BAS is important as that's when we claim it back.


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## Pager (26 April 2009)

robots said:


> hello,
> 
> people need to remember GST is a zero benefit tax, it is purely a tax collection service
> 
> ...




TBH

Ive been thinking why do i operate like this, the accountant charges me a fair wedge to claim the GST back, at least the fee is deductible but some quarters im quiet trading wise and its hardly worth the effort.

I'M also thinking what the hell is the accountant doing  last financial year and the year before i made no contribution to super, but im now thinking if i had then 1) its a low risk long term tax effective investment and 2) i could have claimed it as a tax deduction, instead i paid a bucket full of tax and have been hit with also paying high amounts of installment tax.

Ive done well anyway and need to shoulder some blame on myself for not asking but would have also thought that a half decent accountant would have also raised the issue


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