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:
- Call 02 6642 0433.
- Email firstname.lastname@example.org
* 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
This information has been provided by MLC Investments Limited (ABN 30 002 641 661) and MLC Limited (ABN 90 000 000 402) members of the National Australia Bank group of companies, 105–153 Miller Street, North Sydney 2060.
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.
Before making any decisions on the basis of this communication, you should consider the appropriateness of its content having regard to your particular investment objectives, financial situation or individual needs. You should obtain a Product Disclosure Statement or other disclosure document relating to any financial product issued by MLC Investments Limited and MLC Nominees Pty Ltd (ABN 93 002 814 959) as trustee of The Universal Super Scheme (ABN 44 928 361 101), and consider it before making any decision about whether to acquire or continue to hold the product. A copy of the Product Disclosure Statement or other disclosure document is available upon request by phoning the MLC call centre on 132 652 or on our website at mlc.com.au.
Past performance is not a reliable indicator of future performance. The value of an investment may rise or fall with the changes in the market. Please note that all performance reported is before management fees and taxes, unless otherwise stated.