Research recently released by the University of Western Australia’s Business School suggested that for most small business owners, making appropriate and regular superannuation contributions for themselves was not seen as a priority, with many believing that selling their business would provide just the healthy nest egg they needed for their retirement!
Whilst most business owners are very aware of the superannuation obligations they have to their staff, under Australian law, small business owners are not legally obliged to make super contributions to themselves. So apparently many don’t!
Almost a quarter of self-employed Australians had almost no superannuation at all in 2012, according to research by the Australian Super Funds Association (ASFA).
Business owners simply cannot rely on selling their business to fund retirement.
Market conditions and the economy can affect the sale price of your business, so it is important to have a plan in place.
Getting ready for retirement with superannuation can also provide tax benefits that serve to make it an attractive option.
There are many benefits of paying yourself super – not the least is the fact that you’ll be saving for your retirement! Having more funds in your superannuation fund means you will be better placed to retire if and when you wish. This in turn gives you more option as to how you choose to live your retirement.
If you have enough money put away for retirement, you can choose when you stop working, instead of being forced to keep going for financial reasons. And there are tax benefits to paying yourself super – paying yourself super can actually reduce the tax you pay on your income.
If you make contributions to your super fund before 30 June each year, you can claim annual tax deductions, up to the age of 75. Just make sure you don’t exceed the super contribution cap. You or your business may be able to claim a tax deduction of up to $30,000 annually for contributions to your super fund (or $35,000 annually if you are aged 50 or over).
Before you start making superannuation contributions, you must think about choosing a fund – this is an important decision and should not be taken lightly. Different funds offer different investment options and benefits and charge different fees, so the fund you choose can have a significant impact on the size of your nest egg.
If you would like to have a chat about how we can help you get organised and start planning for your retirement, simply give me a call on 5331 6550 and I’ll organise a time to catch up.