Super tips for the self-employed

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If you’re running your own business, there could be some tax concessions if you’re proactive about growing your retirement savings through super.

If you are self-employed or a partner in a partnership, you won’t get Super Guarantee (SG) contributions from an employer. This means you’re responsible for making sure your super balance grows.

While it’s easy to forget your super when you’re self-employed – research from the Association of Superannuation Funds of Australia (ASFA) shows that around 23% of self-employed Australians have no super at all* – there may be tax concessions if you keep up your super contributions.

Here are some ways you can make the most of the tax breaks on offer.

1. Claim a tax deduction

You may be able to claim a tax deduction on your personal super contributions and they’ll generally be taxed at just 15% in your super fund.

Keep in mind that there are some eligibility requirements to satisfy before you can claim a tax deduction.

There are also limits to the amount you can contribute to super during a financial year before additional tax applies.

2. Receive bonus contributions

If you estimate that you’ll earn less than $50,454 for the 2015-16 financial year, it might pay to think about making voluntary after-tax contributions, as you could qualify for a co-contribution from the government. If you earn $35,454 or less during the 2015-16 financial year and make an after-tax contribution of $1,000, the maximum contribution of $500 applies.**

You can find out more about the government co-contribution at the ATO website.

3. Minimise your tax liability and maximise super when you sell business assets

If you’re a small business owner who will be selling eligible business assets (for example, at retirement), you may be able to access generous tax concessions to help reduce or eliminate Capital Gains Tax.

There are special concessions for contributing eligible small business sale proceeds to your super – these proceeds don’t count towards your normal contributions caps, which means in some cases you could contribute an extra $1.395 million to super when selling your business.

Find out more about the government’s small business Capital Gains Tax concessions at the ATO website.

Contact us today

To find out find out how you can take advantage of the tax concessions on offer to the self-employed, contact me today:

* Association of Superannuation Funds of Australia (ASFA), An update on the distribution and level of retirement savings. March 2014.

** All figures apply to the 2015-16 tax year unless otherwise specified.

24 October 2015

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This communication contains general information and may constitute general advice. Any advice in this communication has been prepared without taking account of individual objectives, financial situation or needs. It should not be relied upon as a substitute for financial or other specialist advice.

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