Can you believe another financial year is done and your tax refund cheque (or bill) is coming? Freelancers, is it time to think about Voluntary Super and plan ahead for your future?
The Government has pledged to increase the employer superannuation guarantee from 9 per cent to 12 per cent, to be phased in by 2019-20. If the Federal Treasurers believe that 9 per cent is not enough to give the average worker a decent superannuation fund – then what about the thousands of freelancers and other self-employed who have 0 per cent compulsory super!
A lot of people who work from home do not pay themselves super – they simply don’t have to, can’t afford to early on in their business, and have other business concerns that employees don’t (e.g. chasing overdue payments, marketing, complying with GST, BAS, or allowing for income tax).
This oversight is going to impact you, the hardworking freelancer, later in life. Have you seen the crowded carpark at Aldi’s on a Thursday… would you like that to be you shopping for cheap food on a miserly pension at 70? (Assuming there is an Aged Pension at all).
As a Freelancer, I would suggest you look around for an industry fund where you can start a Personal Super plan. It’s pretty simple to rollover any super you might have floating around from before, and there are online services which allow you to chase lost super accounts from your previous workplaces (don’t pay for it upfront though!). E.g. FindMySuper.com.au.
I remember when I was a Temp it was hard to keep track and then when I did, they let me have the ‘unpreserved’ super as a cheque, which I promptly spent on whatever!
This year, having a bit of a shock when I did my Profit and Loss, I’ve decided it’s time to Pay Myself First (and reorganise the business to get in more ongoing income).
Paying yourself first means that every month or quarter you set an amount (say 5% to 10% of averaged income after expenses) to go out automatically to your personal Super account.
Voluntary Contribution Boosts!
When you make a personal contribution to Super, subject to lots of rules, the Australian Tax Office puts a co-contribution of maximum $1,000 into your Super (not $1500 as in this old example):
http://www.ato.gov.au/individuals/content.aspx?doc=/content/42616.htm&page=14&H14
You will need to read this to work out if you are eligible for the co-contribution. Nevertheless, if you make the proper instruction to your Super Fund (that it’s a personal contribution not a guaranteed one), then the Government works it out for you.
If you found this article helpful, please check out my book: Sack Your Financial Planner. Thanks…
