Self-Employment & SMSFs: The Upside of This Powerful Combo


Making contributions is a vital part of running your self-managed super fund (SMSF). Once you establish your super fund it becomes eligible to receive contributions as well as rollovers. Employers are obligated to deposit 9.5% of their employees salary to the their super fund and this is know as Superannuation Guarantee (SG). Anyone who is self employed is not obligated by law to make super payments to the fund. However, self employed super contributions are highly important for boosting your savings and accumulating enough money so that you can have happy and carefree retirement days. Running your own business and successfully managing your super might seem like a difficult task, but it definitely not impossible. In fact self-employment and SMSFs are a powerful combo that can bring you a number of benefits. However, before you can reap the benefits you should get a better understanding on how you can effectively make super payments to your fund. To achieve this you should first get more familiar with all the different categories of contributions.

Self Employed Super Contributions

The first group are concessional contributions which are basically super payments for which a tax deduction has been claimed either by the SMSF trustee or the employer. These can further be divided into mandate, salary sacrifice and personal contributions. Mandated are those obligatory payments that are made by employers on behalf of their employees. On the other hand salary sacrifice are voluntary payments that the employer makes to your fund account. While personal super payments that fall under the category of concessional contributions are actually the ones that you make when you are self employed. You are allowed to claim tax deductions for self employed super contributions and the deductions will depend on the amount you have deposited into your SMSF account.

The second group are non-concessional contributions which can simply be described as payments for a tax deduction has not been claimed. These can additionally be divided into voluntary personal super payments that are usually not made by self employed people and are not eligible for tax deductions. There are also spouse contributions which as the name suggests are made by the spouse of the SMSF trustee, who doesn’t necessary has to be a member of the super fund.

As we mentioned earlier self employed individuals can obtain tax deductions for their contributions, to do this successfully you need to follows some basic rules. Notifying your super fund is the first step you should take prior to claiming tax deductions for contributions. The notice is a legal document that includes both valid and approved form. To provide your fund with a valid notice you should still have the role of member and trustee and the contribution for which you are claiming tax deductions should still be part of the fund. To get an approved form for your notice you have the option to write to your SMSF stating that you intend to request a tax deduction, you can complete a Notice of intent to claim personal contribution, or you may use the paper form of your fund as well.

Goran Nikolov is a content writer of Protista, a website where you can find a lot of interesting lists. He is from Macedonia and has a passion to write lists about everything that surrounds him, especially about sports, health, music, technology and history. Goran loves to play basketball in his free time, enjoys playing on his guitar and sharing his thoughts with others.