Bankruptcy refers to the situation where a person or business cannot pay outstanding debts. When declared bankrupt a legal procedure is put in place where the business assets or property owned by the individual or business is used to pay debts. Changes to the Corporations Act of 2001 means that employees of bankrupted businesses stand a good chance of getting any outstanding super entitlements paid, as they must be paid before payments to ordinary unsecured creditors. If an individual is at risk of going bankrupt, while they generally won’t be able to access their superannuation balance, they may be able to apply to the government to access their super on compassionate grounds if, for example, their house is at risk of being sold by their mortgage lender.
The legal dissolution of a marriage is known as a divorce. Divorce can have financial implications for both parties, as it can mean dividing assets and ensuring those previously financially supported by the marriage (such as dependent children) continue to be looked after. A person’s superannuation account is considered as property in the event of divorce so like any other asset it can be divided between the parties by agreement between them or by court order.
Sole trader superannuation
As a sole trader, you generally don’t have to pay super contributions for yourself. However, it may be a good idea to consider contributing to super to help prepare for your retirement. If you are sole trader and make a voluntary contribution to super, you can claim a tax deduction, so you only pay 15% tax on the contribution – rather than the potentially higher tax rate you paid when you first earned the money. Contributions you make and claim a tax deduction on count towards the concessional contribution cap of $25,000 per year. If you have full-time, part-time or casual employees in your sole trader business, you will need to make superannuation guarantee contributions to their super fund if you pay them $450 or more (before tax) in a calendar month. Find out more about who is eligible to receive superannuation guarantee payments.
Self employed superannuation - For Employers
If you are self-employed and make a voluntary contribution to super, you can claim a tax deduction for the contribution and only pay 15% tax. Contributions you make and claim a tax deduction on count towards the concessional contribution cap of $25,000 per year. To be eligible to claim a tax deduction, you need to have made a voluntary contribution in the current financial year and lodge a notice of intention to claim a tax deduction with your super fund. Note that now anyone who makes a voluntary contribution to super can claim a tax deduction; this may be an alternative to making salary sacrifice contributions.