As a Business Owner do I have to Pay Myself Super?
Depending on how your self employment is structured, you may or may not be required to contribute to your super as part of the Superannuation Guarantee.
If you are self-employed as a sole trader or in a partnership, you don’t have to pay super guarantee for yourself. As you’re not deemed and ’employee’. However, you can choose to make personal super contributions to save for your retirement.
If your self employed business structure is that of a Company, the company must pay your Super Guarantee to your nominated super fund as you’re considered an ’employee’.
If your business is a Trust depending on how your income is structured you may be required to pay Super. If you only receive trust distributions rather than wages, then there is no obligation to pay the Super Guarantee. But, if your trust pays you a wage, then you’re considered an ’employee’ so therefore Super Guarantee is applicable.
Despite not having to pay Super Guarantee contributions under certain business structures, you may still consider making contributions into superannuation to save for your retirement due to the low tax environment within superannuation. A further benefit is that you may also claim a tax deduction for any concessional contributions, such as personal deductible contributions, that you make to your superannuation fund up to a limit of $27,500 a year. Other types of concessional contributions that also count towards the $27,500 limit include SG contributions and salary sacrifice contributions.
Which ever your circumstances, make sure your super fund has your tax file number (TFN). If not:
- contributions are taxed an additional 34%
- your fund can’t accept personal contributions
- you may miss out on a super co-contribution, if eligible
- it will be harder to keep track of your super
If you have any queries related to Super, please don’t hesitate to get in touch.
