Superannuation Strategies for Business Owners

Concessional contributions (CCs) are before-tax contributions to super — employer contributions (SG), salary sacrifice, and personal deductible contributions. They're taxed at 15% inside the fund, regardless of your marginal tax rate. The tax saving is the difference between 15% and your marginal rate. The 2024–25 concessional contributions cap is $30,000 per year. For someone on a 47% marginal rate, contributing $30,000 to super saves: $30,000 × (47% - 15%) = $9,600 in tax. Every year. Compounding inside a low-tax environment. This is the single most reliable wealth-building tool available to Australian high-income earners and business owners. Personal deductible contributions work differently from salary sacrifice for self-employed/business owners. You make a personal contribution to your SMSF or industry fund, then claim a deduction in your personal tax return using a Notice of Intent to Claim a Deduction (s290-180 notice). You must lodge this notice before you lodge your tax return or before 30 June of the following year — whichever is earlier. Missing this notice means the contribution is treated as non-concessional (after-tax) and you lose the deduction.

Since 2019–20, unused concessional contribution cap space can be carried forward for up to 5 years, provided your total super balance at 30 June of the prior year was under $500,000. This is significant for business owners who have had low-income years (startup phase, maternity leave, sabbatical, recovery from medical procedures) where they contributed below the cap. Example: In 2020–21 you contributed $10,000 (cap was $27,500). You have $17,500 of unused cap space. In 2021–22 you contributed $12,000 — another $15,500 unused. By 2024–25, you have accumulated unused cap of perhaps $50,000–$60,000 (up to 5 prior years). If you have a high-income year (a product sale, a large client contract), you can make a $80,000+ concessional contribution in one year, claiming a deduction and reducing a large tax bill substantially. The catch: your total super balance must be under $500,000 on 30 June of the previous year. Check your balance before planning carry-forward contributions. If you're close to $500,000, consider timing the contribution strategy carefully.