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Superannuation for Business Owners

As the end of Financial Year approaches many business owners think about their own superannuation contribution.
What is Superannuation?
Superannuation is a regular payment that employers make every quarter to their employees’ superannuation funds, or, in other words, is the employee’s pension. Superannuation is mandatory in Australia, which means that each employer must pay 10% of the employee’s wage into the nominated Super Account.

What happens in case someone is self employed?
If you run a business as a sole trader, partnership, trust, or company (pty ltd) you are NOT OBLIGATED to pay yourself superannuation, however, we highly recommend you do.

Superannuation is not only a great strategy to save some money for your pension, but it is also tax deductible. If you, for example, are a sole trader and decide to pay yourself $10,000 of superannuation at the end of the financial year, that $10,000 will come out of your Profit, and it will be considered a personal tax deduction within your tax return. To make this deductible, a notice of intent to claim or vary a deduction must be lodged with the ATO. The Concessional contribution cap for the current financial year (2021-2022) is $27,500, which means that any contribution within this amount is tax deductible.

Which Superfund is best to choose?
That is entirely up to you. There are many super funds out there, the important thing is to know what you are charged for. How to find it out? Call them up and ask. By default, they might give you the ‘premium’ package, which has the highest charges. Reduce or eliminate what you do not need, and keep it at a minimum. Also, be aware of how your Superfund is doing financially, and regularly check the transactions listed in your Super Account.

Do you have any questions? Post them in the comments below!

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