Super for the self-employed
If you’re a contractor, sole trader or self-employed, then you probably already know that superannuation is just as important for you as it is for regular employees.
But in fact, since there’s no compulsory superannuation guarantee requirements for contractors, sole traders or the self-employed. To make sure you have regular contributions flowing into your super account, it’s likely you’ll actually need to take a lot more interest in your superannuation affairs.
After all, if you don’t put some of your income aside now, you might not have enough money to live on when you retire.
Remember that contributions to your super are taxed at the concessional rate. You should seek appropriate taxation or financial advice.
Fortunately, it’s not that hard to manage your own super contributions – especially if you’re already in a good superannuation fund – and there can even be tax advantages for you.
Managing your own super contributions
There are two basic ways of making your own super contributions if you’re self-employed:
- If you pay yourself a wage, remember to also send at least 10.5% of your before-tax income to your super fund or
- If you pay yourself out of your business revenue, the majority of super funds will let you send a lump sum when your cash flow allows for it.
Sole traders, self-employed business people and contractors are subject to the same contributions caps as regular employees. Make sure you are aware of the contributions caps, as you will have to pay a higher tax rate and may have to pay an excess contributions charge if you exceed them.
For more information about voluntary super contributions, head to the page about contributing extra to super.