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Freelancer's & The Self-employed's Superannuation Contributions
Superannuation can be tricky if you’re self-employed but investing in your retirement savings is important – Future-You deserves to have a good life too.
Here are the basics.
Who pays your super?
All employers are required to make superannuation contributions (currently 9.5%) on behalf eligible employees; but if you’re self-employed, who is responsible for your contributions? Chances are it’s you.
If you’re receiving income as a freelancer or sole-trader, the responsibility for making super contributions is yours. The ATO refers to these as voluntary contributions.
If you’re employed by your own company (i.e. your business is registered as a company for tax purposes), then the company is required to make the 9.5% contributions on your behalf.
If you’re undertaking contract work, you may be eligible for employer contributions depending on the structure of the contract and working arrangements. Make sure you know your entitlements.
The ATO has a handy tool to help you determine if you should be getting paid super by an employer.
How much do you have to contribute?
As a freelancer or sole-trader there is no minimum amount you’re required to contribute to your super. However, it’s a good idea to try and pay yourself the same 9.5% that ‘employed’ workers get.
Don’t pull that face at us! We understand that your income can be quite variable when you’re self-employed but we’re not crazy for thinking you deserve financial security when you retire!
Plus, there are always…
Tax deductions.
If you’re self-employed for the full financial year, you can claim a tax deduction for the full amount of voluntary super contributions you make for that year.
To count as ‘self-employed’, no more than 10% of your assessable income in that financial year can have been earned through employment (including fringe benefits and employer paid superannuation).
You might also be eligible for…
Government co-contributions or Low Income Super Contributions.
The Government Co-contribution is a tax-free payment made to the super accounts of low to middle-income earners who make voluntary super contributions (for which no tax deduction is claimed). The Federal Government will match $0.50 for every $1 you contributed (up to $1000) this financial year. The maximum co-contribution of $500 applies for people earning up to $35,454*, reducing by 3.333 cents for each dollar of income up to $50,454*.
If you earn a taxable income of less than $37,000* you may be eligible for the Low Income Super Contribution of up to $500.
If you’re eligible, these contributions will be automatically calculated by the ATO and deposited in your super account after you lodge your tax return.
