Breaks for SME Business Owners: Superannuation Contribution Benefits

Posted by Julie Doyle In Uncategorised 0 comment

Super is generally one of the most considerable assets we have. Yet, we see many individuals (including SME business owners) who see superannuation as just a ‘compliance requirement’ – instead of the immense opportunity it can be.

Making voluntary superannuation contributions can help you plan for your retirement and minimise your taxes (amongst other things). However, we see many business owners who don’t make the most of the opportunities that come with voluntary superannuation contributions.

Personal superannuation is an asset for business owners that offers more certainty than investing in your business alone.

But, we often see SME business owners fail to pay into their own super account. Around 20% of self-employed workers have no super at all, contrasting to less than 10% of employees. This isn’t not sensible, given the vast upside to building and managing your superannuation for your retirement.

Voluntary superannuation contributions are one of the simplest ways to access a sizeable tax reduction for you. While the precise nature of the tax savings will vary depending on whether you make concessional (before-tax) or non-concessional (after-tax) contributions, adding to your superannuation should be an essential part of your overall tax strategy.

Some of the effects of making superannuation contributions include:

Reducing your taxable income.
Boost your superannuation balance for retirement.
Purchase your business premises via a self managed superannuation fund.
Allow your wealth to grow in a low tax rate environment.

The number of Self-Managed Super Funds (SMSFs) in Australia is increasing everyday, given that they offer you greater control over the management of your super and the potential for you to access further tax minimisation strategies. The rules relating to self-managed super funds in Australia also offer several advantages for business owners. These include:

The potential to reduce capital gains tax.
Tax rates are generally much lower than in other structures (income tax capped at 15%)
The potential to purchase your business premises in your SMSF
The potential to earn ongoing income in retirement through business operations or rental income (or both).

However, despite the potential advantages, an SMSF is not suitable for every business owner. Therefore, deciding whether to set up an SMSF is a major decision. It is a decision that should not be taken lightly or before seeking professional advice. If you’d like to make the most of the superannuation contribution benefits and opportunities, reach out.