Self employed or contracting? These four tips will help you get more from your superannuation

Self employed or contracting? These four tips will help you get more from your superannuation

While everyone needs to be thinking about their superannuation, if you are self-employed or work as a contractor you need to be thinking about it even more.

That's because in most cases you are responsible for making payments to your superannuation, and not an employer.

Read on to learn the top four questions we're asked from those who are self-employed or contracting.

Does the super guarantee apply to me if I'm self-employed?

If you are self-employed as a sole trader you are not required to pay the compulsory 9.5% super guarantee. Unfortunately, this means that superannuation is often forgotten or pushed aside in favour of more immediate expenses.

Does the super guarantee apply to me if I'm contracting?

Even though you consider yourself an independent contractor, you may still be eligible to have those you contract with pay the super guarantee for you.

If you are being paid principally for labour, you are likely to be considered an employee for super guarantee purposes, even if you quote an ABN.

The ATO has handy web-based tools which can help determine whether you, as a contractor, will be eligible for super guarantee for those that you contract with. If you are eligible, ensure that your super guarantee is being paid to your chosen fund on a regular basis. This is a handy link for helping determine whether you are an employee or a contractor for super guarantee purposes. 

I’d like to contribute to my super. Am I able to claim a tax deduction?


How can I use the super co-contribution to boost my super balance?

If you qualify, all you need to do is contribute up to $1,000 and the government will match your contribution – 50c for each dollar contributed, up to $500. This is a guaranteed return. Remember though – you cannot claim a deduction for the $1,000 contribution.

In order to qualify, firstly you need to earn less than the thresholds. For the 2019 financial year, if you earn less than $37,697, you will qualify for the full $500. This tapers off at a rate of 3.33c per extra dollar earned until your income reaches $52,697, after which you no longer qualify.  

Additionally, you will also need to ensure that you earn at least 10% of your income from eligible employment or carrying on a business or a combination of both.

Finally, you will need to be under 71 years of age, not holding a temporary visa, and – of course – you will need to have lodged your personal tax return.

The ATO has a handy calculator on their website which you can use to see whether you qualify here.

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