Introduction
If you are self employed, there is no one to make automatic payments into your chosen super find for you. You therefore need to make sure you pay in yourself. In lie with the recent super changes, there are benefits of being self employed and paying in additional super. This article summarises those benefits and some disadvantages too.
Tax savings
If you are self employed and contributing to your super, you can save on tax. There is a tax deduction for the first $3000 paid into a fund, and a 75% deduction for larger amounts up to certain limits, depending on your age:
- if you are under 35 the limit is $13,233;
- between 35 and 49 - it's $36,754; and
- over 50 it's $91,149
These figures are reviewed annually).
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However, you cannot claim a deduction if you have income from employment and this is more than 10% of your total income.
Which fund is for me?
There are a umber of possibilities as to the types of fund you choose. To name just a few:
- insurance companies;
- banks;
- other financial institutions.
These are generally "public-offer" funds, which means they accept contributions from the public in general.
What to consider when choosing a super fund
When you are choosing which fund to use, you should think about:
- the administration fees;
- the investment performance and the institution's reputation;
- insurance cover options etc.
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You can also do-it-yourself in a self-managed fund which gives you complete flexibility, and independence, along with the associated risks. A sound choice if you feel confident in your accounting alibility.
Can I get disability/death benefits?
Every fund has a different policy, however, in general you can pay an insurance premium to cover this. It should include benefits for total and temporary disability. Usually the premium is simply deducted from your account balance.
Can I choose the investments?
This is usually available in a public-offer fund, although changing investment strategies can involve an additional administrative charge.
Also your participation in this is usually limited. For example, you may be able to choose between stable investment and more risky international equities. The trustee makes the rest of the decisions. That’s where the benefits of a self-managed fund come into play.
My own fund?
You can set up your own fund, which is called a "self managed fund".
This fund must have fewer than five members (for example, a husband and wife and two children) and give control and responsibility for investment and administration to the members. It is regulated by the Tax Office. Note, the members must be trustees of the fund.
If for some reason, one of the members of the fund cannot be a trustee then, from July 1999 this fund will be called an "approved trustee funds with fewer than five members". This type of fund is regulated by the Australian Prudential Regulation Authority but it does not have to comply with all the requirements of larger funds (for example, providing reports to members).
As a ball-park figure, experts suggest you should have a superannuation balance of al least $70,000 before setting up your own fund. | 
