With business expenses piling up around you, it’s easy to leave your own super contributions last on the list.
While it’s law for you to pay the 9.5% of salary, superannuation guarantee for your employees, many small business owners fail to contribute the same amount (if any) to their own.
New financial year. New Super strategy.
According to the Association of Superannuation Funds of Australia, 48.5% of self employed Aussies have less than $40K in super and 22.6% have none at all.
We often hear our clients tell us they will start paying themselves super contributions “next financial year”. But from experience we know that one year rolls into the next and the cycle of no payment continues.
Super is complicated and can’t just be dealt with in this short blog, however below we have mapped out some general information that relates to three stages of business.
Subject to qualifications, business owners are eligible to hold business premises as a super asset. By using super, capital and cash flow is freed up for reinvestment in the business.
Businesses owners can contribute up to $35,000 per person (subject to age based limits) into their superannuation funds and receive a tax deduction for the contribution. Combined with super earnings being taxed at only 15%, this is an attractive option to generate wealth, tax effectively.
Currently, a superfund in accumulation phase receives a 33% discount on any Capital Gain. If the fund is in pension phase, the capital gains tax on any gain made is NIL.
Additionally, for eligible small businesses, there are Small Business CGT Concessions, which do allow (when eligible), capital gains to be discounted further by making contributions in to a complying superannuation fund.
Review your super plans regularly. It’s not just about retirement – it can be a very useful tool for managing your business cashflow and tax strategy.
Employ professional advice from your accountant and financial planner but beware of unscrupulous operators in the market. Ensure your adviser is licensed; has a good
track record of success and offers legitimate investments.
Not sure where to start?
Click here to arrange an obligation free consultation to discuss your super strategy.
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