It’s Australia’s retirement savings scheme, designed to provide everyone with investments that support their retirement.
What makes superannuation different from regular investments is that you can’t take money out whenever you like. Besides a few exceptions, it’s restricted until you’re 65 or 60 (for those born after 01/07/1964) and retired.
Long-term investment and savings schemes are truly important. People without long-term savings will one day find themselves living on government support payments, which are small amounts that cover a “no-frills” lifestyle.
The catch is that whereas superannuation is automatically contributed by employers on behalf of employee’s, self-employed folk must set it up for themselves.
How does it work if I have staff?
Whenever you employ staff, you are required to provide them with a choice as to the super fund that the employee would like their payments made to. If they do not have a superannuation fund, you must provide them with a default fund to pay their contributions to.
The compulsory contribution amount is currently 10% of gross wages. These payments must be made quarterly, within 28 days of quarter end.
Your payroll software will automatically calculate the superannuation portion and software like Xero, make the payment process simple with their “Automated Super” processing.
What about my own Superannuation?
If you’re an employee of your business receiving salary and wages, you’re sorted. The business pays the 10% contribution via the payroll system – the same as all other employees.
If you’re not an employee, or if you’re a sole trader, contributions are personal expenses. Moving funds from the business bank account to your personal superannuation account should be recorded as drawings.
You may be able to claim a tax deduction for personal super contributions that you made to your super fund from your after-tax income.
Our Beany support team is ready for any questions you might still have. At the same time, we aren’t financial advisors, so we can’t advise you on choosing a particular Superannuation Fund! However, we do have trusted partners that we can refer you to. [email protected] or 1800 955 089