Superannuation Contributions for the Self-Employed.
Are you newly self-employed? – That is, a sole trader or a partner in a partnership?
As a Sole-Trader or Partner, you are not obliged to make contributions to your nominated Superannuation Fund like you are when you are an employee of your own or another company. Despite the fact that there is no requirement to make Superannuation Contributions under these circumstances, they are a very important consideration. The government has some initiatives to help the self-employed boost their super savings for the future.
If you are a low or middle income earner (i.e. you earn from around 30k – 60K); you can take advantage of the super co-contribution payment by making ‘eligible personal super contributions’ to your super fund. The government will then match your contribution to your fund to the value of $1000. The amount matched by the government will depend on the financial year in which you make the contribution, and whether your total income falls between the super co-contribution thresholds for that financial year.
The government co-contribution is not subject to tax within your superannuation fund, and cannot be drawn from your superannuation fund unless a condition of release has been met.
In order to receive the co-contribution, all you need to do is make eligible personal super contributions to your Superfund, and lodge an income tax return.
Low Income Super Contribution
The LISC is a government payment of up to $500 per year designed to assist low income earners save for their future. The LISC is 15% of the (before-tax) contributions that you or your employer makes to a maximum payment of $500. To be eligible for the LISC:
- You have made before-tax contributions to an eligible fund throughout the financial year.
- Your adjusted taxable income does not exceed $37k Ø You are a permanent resident Ø
- 10% or greater of your taxable income is from either business or employment (e.g. as opposed to investment income).
- The amount payable is $20 or greater.
In order to receive the LISC, you do not need to do anything specifically,aside from lodge your income tax return. The ATO will receive information from both your processed personal tax return and your Superfund about your contributions. For more detailed information on the above topics, don’t hesitate to contact Freshwater Taxation.
02 9045 1794