Are you self-employed? Or maybe a contractor? If so, you should seriously think about your retirement. Your best option is SMSF as it gives you full control over your retirement fund and gives you the freedom to make financial decisions on your own. Thus, if you do not want to put relaxed and comfortable living after retirement at risk, act fast and set your self employed superannuation.
Although, you are probably familiar with SMSF, it doesn’t hurt to go over basic details. SMSF is a form of retirement fund that offers its members a full control over investment choices and decisions. The fund can have up to 5 members and every member is a trustee as well. Not a single member can be an employee of another member and not one member can receive remuneration for managing the fund. The fund must always be in compliance with the ATO rules and must be established for one purpose only – to provide benefits to members upon retirement.
When it comes to self employed superannuation, self-employed individuals can contribute to their SMSF tax-effectively by claiming a full tax deduction for contributions they make to their super until the age of 75. You need to register in the self-assessment system with revenue of a self-employed individual. This is what will make you credible and eligible to claim a tax deduction on superannuation contributions. Superannuation contributions are also called ‘concessional contributions’, due to the concessional rate of 15% that self-employed SMSF contributors are taxed at.
There are two ways for self-employed to build their own super for self employed superannuation. They can either receive bonus contributions or get a tax deduction. Let’s take a closer look at both.
BONUS CONTRIBUTIONS
If your annual income as a self-employed is estimated at less than $49,488 per year, one of the best options for you is to make after-tax contributions to super. This will qualify you for a contribution paid by the Australian government. For example, if you earn less than $37,000 per year, the government may assist you with your self employed superannuation by making a contribution of up to $500 to your SMSF.
TAX DEDUCTION
If the profit you make per year is big enough to allow you to save at least $30,000 per year for your super, you can expect great tax deductions and fruitful self employed superannuation for the years to come. Self-employed people over the age of 50 normally have the ability to contribute in self employed superannuation even up to $35,000 per year. If you are already self-employed and you need more information about tax deductions for self-employed SMSF, visit the official website of Australian Taxation Office.