Super for the self-employed and freelancers

Super can be tricky if you're self-employed or a freelancer. But you deserve the same financial security and comfort in retirement as 'traditionally' employed Australians. Media Super understands the unique challenges you're facing and can help you understand your rights and get your super sorted.

Superannuation can be tricky if you’re self-employed or a freelancer.

Your income might vary from month to month. You’re balancing immediate costs with saving for the future. You might not be aware of your rights or responsibilities around super. And sometimes you just might not have the time to deal with more admin.

We get it. But we think you deserve the same financial security and comfort in retirement as ‘traditionally’ employed Australians.

We’ll take you through the basics, how can you build your retirement savings, and some tax considerations.

Who pays your super

All employers are required to make superannuation contributions on behalf of eligible employees; but if you’re self-employed, who is responsible for your contributions? Chances are it’s you.

If you’re receiving income as a freelancer or sole-trader, generally the responsibility for making super contributions is yours. These are known as voluntary contributions or after-tax (non-concessional) contributions.

If you’re employed by your own company (i.e. your business is registered as a company for tax purposes), then the company is required to make the 11% contributions on your behalf.

If you’re undertaking contract work, you may be eligible for employer contributions depending on the structure of the contract and working arrangements. The ATO has detailed information on when contractors should be paid super, as well as a handy tool to help you determine if you should be getting paid super by an employer.

If you’re a performer or involved in performances, film, TV or radio you may be deemed to be an employee for superannuation guarantee purposes and the company engaging you is responsible for making super contributions on your behalf.

How much do you have to contribute

As a freelancer or sole-trader there is no minimum amount you’re required to contribute to your super; however, it’s a good idea to try and pay yourself the same 11% that traditionally employed workers get. That might not be realistic, depending on your situation and income.

A good way to look at super contributions is to consider them as another standard business cost that you need to include in your budget. And if 11% isn't doable, start with a smaller percentage that you can afford.

How to make contributions

If you are self-employed, any contributions made to your super account will be after-tax contributions. However, you are able to claim a tax deduction for these contributions; see the tax section below for more information.

The easiest way to make after-tax contributions is BPAY® through your bank account. You can set up a regular payment or make a one-off payment. You can find your unique BPAY® details – biller code and reference number – on your Media Super member card or digital card, or by logging into your online account and heading to the 'personal details' page.

If you are a making a one-off contribution to your Media Super account, you can mail us a cheque along with a completed contribution form.

Find out more about after-tax contributions.

Insurance

Being self-employed or freelance already comes with a range of challenges; but with Media Super, being worried about insurance isn't one of them.

Unlike many other funds, Media Super insurance covers self employed and freelance members. And we provide cover for many occupations across the media, arts and entertainment industries that other funds won't cover.

Find out more about your insurance options.

Tax considerations

In addition to the general tax rules for super, there are a few extra options that you may be able to take advantage of if you're self-employed or a freelancer.

Claiming a tax deduction for super contributions

As we mentioned above, if you are self-employed and you make contributions to your super, you can claim a tax deduction.

You’re able to claim a tax deduction for all your super contributions in your tax return; however, the ATO will apply additional tax if your super contributions exceed the relevant before and after-tax contributions caps.

You can only use this deduction to reduce your taxable income to nil – you can't add to, or create a loss for, your business through contributing.

Everyone's circumstances are different and you may want to speak to your accountant or registered tax agent before making a claim to ensure you're claiming the right amount.

Find out more about how super is taxed.

Income averaging

Income averaging is designed to prevent you from being taxed at higher tax rates in a year when your income may be above average. If you're eligible, it allows you to pay tax based on your 'average' income over the previous five years.

There are very specific conditions you have to meet to be eligible for income averaging. Visit the ATO website for full details.

You may want to speak to your accountant or registered tax agent to make sure this tax strategy is right for you.

Small business and capital gains tax

If you operate a small business, whether as a sole trader, partner in a partnership or under a trust or company structure, you may be entitled to concessions to reduce the capital gains on the sale of active assets of the business.

If you sell off an asset that qualifies for the Retirement exemption, you have the option of contributing all or some of the exempted capital gain to super, subject to a lifetime limit of $500,000. The amount of the capital gain that is contributed to super will not be treated as a concessional or non-concessional contribution, provided the contribution counts towards and does not exceed your lifetime CGT cap.

For more information about capital gains concessions for small business, including the Retirement Exemption, visit the ATO website.

Consolidating your super into a single account

If you've worked as a freelancer, chances are you may have super in more than one fund. If you have more than one super account, chances are you’re wasting money on fees. Consolidating your super into one fund makes it easier to manage and grow your money for your retirement. Log into your online account and search for your super with the ATO using your Tax File Number. You’ll need to verify your identity, so have your ID ready.

Learn more about consolidating your super.