by Mark Foxley-Conolly, Director
As a business owner and employer, you have legal obligations to make appropriate super arrangements and payments for your employees. As an individual, paying into your own super is one of the most tax-effective ways to build your financial future.
In this article, our five tips can help you boost your personal super savings and shore up your own financial future. When it comes to your super obligations for your employees, we recommend Superannuation Checklist – Obligations for Employers.
5 Personal Super Tips for Business Owners
#1. What about me?
It’s common for business owners to pay their employees and reinvest profits in the business before (or worse, rather than) drawing a wage and making super contributions for themselves. You should be aware that if you’re not making regular super contributions for yourself, your personal prosperity could suffer and you may not be able to afford the retirement lifestyle you want.
#2. Risky business
By reinvesting profit in the business and not paying yourself super, you are effectively leaving your personal wealth in the business, where it may be at risk should anything untoward happen to the business.
#3. Lost opportunities?
By making minimal or no super contributions, you lose opportunities for building your retirement savings and the compounding interest that accumulates on your super investments. Changes to super have also made it more difficult to get large amounts of money into super, meaning you need to plan your contributions more carefully. You will also miss out on the considerable tax savings available in super’s tax-effective environment.
In some circumstances, super is important for CGT savings. If you are under 55 if/when you sell your business, a CGT concession for small businesses provides a retirement exemption lifetime limit of $500,000 when the exempt amount is paid into a complying super fund or a retirement savings account.
#5. Don’t get caught out
If you do pay super but haven’t reviewed your strategy since 1 July 2017, you should do so immediately to ensure you are complying with the new concessional contributions cap of $25,000 per financial year (regardless of age). The reduced annual contribution means that business owners need to begin contributing to super earlier to accumulate sufficient super savings by the time you retire. In case you missed it, here’s my article on key super changes effective from 1 July 2017.
If you would like assistance to more effectively plan your super, need information about Self-Managed Super Funds (SMSFs), or have questions about legal obligations or super strategies, please contact Mark Foxley-Conolly on 07 5479 5499 or email firstname.lastname@example.org to discuss your needs.
At VBA we specialise in strategic tax advice, offering tax and financial reporting for individual income earners, family businesses, tradies and construction companies.
Victor Bimrose Accountancy Pty Ltd (ASIC No. 1259423) ABN 53 010 957 294 is a Corporate Authorised Representative of Merit Wealth Pty Ltd ABN 89 125 557 002, Australian Financial Services Licence Number 409361.
Mark Foxley-Conolly (ASIC No. 1259421) is a Limited Authorised Representative of Merit Wealth Pty Ltd ABN 89 125 557 002, Australian Financial Services Licence Number 409361
General Advice Warning: This information has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs.