What you need to know about superannuation
Superannuation or super is important for all Australians, particularly self-employed small business owners. If you’re self-employed, you’re not obligated to pay yourself super, but there are many benefits such as:
– Saving for your retirement which means having more options later in life.
– Reducing the tax you pay on your income. If you make super contributions before 30 June each year, you can claim a tax deduction of up to $25,000 or $35,000 annually if you’re over 60 years of age. Keep in mind, if you want to claim a tax deduction for superannuation contributions, it must be paid before 30 June.
What’s the super rate?
The Government will incrementally increase the Superannuation Guarantee rate over the next 7 years to a rate of 12%. As at 1 July 2014, the super rate will be 9.50%
|Year range||Super Rate|
|1 July 2012||
|From 1 July 2013||
|From 1 July 2014||
|From 1 July 2015||
|From 1 July 2016||
|From 1 July 2017||
|From 1 July 2018||
|From 1 July 2019||
If you have taken on employees or are about to employ, you need to be aware of your obligations. Whether you have them on as full-time, part-time or even casual, all employees are covered by the superannuation guarantee, which means you need to:
– Pay the super contribution amount and that is 9.50% from 1 July 2014
– Check if any employees are eligible for a MySuper fund
– Pay super contributions by the cut off dates each quarter
– Keep records of super contribution payments made which could be done using accounting software such as MYOB Essentials.
What’s this thing called MySuper?
MySuper is a special fund type which will become the norm by July 2017. From 1st Jan 2014, unless an employee selects a choice fund or a self-managed super fund, all employers must pay the Super Guarantee Charge contributions to a MySuper fund. MySuper was introduced as the government expects the following;
- A simple and cost effective default super fund
- Improve the simplicity, transparency and comparability of default super funds
- MySuper will have a number of features designed solely with the interests of members in mind
- Anticipated up to 40% decrease in super fees
The information provided here is of a general nature for Australia and should not be your only source of information. Please consult an experienced and registered tax agent as each small business’ circumstance will vary for end of financial year.