Self-Employed and Superannuation: Voluntary Contributions for Retirement Savings

If you’re self-employed, you aren’t required to pay yourself super guarantee payments. It is however a recommended way to save for your retirement, and making personal super contributions could be beneficial for you in the long run.

As a self-employed individual, you can make regular or lump-sum payments to your super, claim a tax deduction on contributions, and potentially save tax later on.

If you’re looking to start paying contributions to a super fund you already have, always check that you can make those contributions to it if you are self-employed. Your fund will also need your tax file number (TFN) to accept those contributions.

If you don’t provide your fund with your TFN:

• Your super contributions will be taxed an additional 34%
• Any personal contributions you try to include in your fund will not be accepted, which may mean you miss out on super co-contributions you’re eligible for.
• It will be harder for you to keep track of your super.

There are two ways to contribute to your fund if you are self-employed, depending on how you pay yourself. If you receive a wage, you can set up a regular transfer into super from your before-tax income, or if you receive income from business revenue, you can transfer a lump sum when you have enough cash flow.

Employers contribute at least 11% of their employee’s earnings to their super fund. As a self-employed person, bear in mind that there are limits to how much you can contribute each financial year. These are:

• Up to $27,500 in concessional contributions (from pre-tax income, which you can claim a deduction on).
• Up to $110,000 in non-concessional contributions (from your after-tax income or savings).

You may also be eligible for co-contributions to your super from the government if you are considered low-income. Discussing your options for your super with an accountant or financial advisor is highly encouraged and will ensure that you don’t miss out on that potential capital growth.

Disclaimer: This article contains general information only. Regrettably, no responsibility can be accepted for errors, omissions or possible misleading statements or for any action taken as a result of any material in this guide. It is not designed to be a substitute for professional advice, as such a brief guide cannot hope to cover all circumstances and conditions applying to the law as it relates to these items.