Tax deductions for self-employed contributions

Government co-contribution. Don’t miss out!

Test your risk profile online

Share market update

Latest investment returns

New super rules for employers

Tax deductions for self-employed contributions

As the end of the financial year approaches, it’s worth remembering that super contributions by self-employed people are a great way to reduce your tax bill.

Eligible self-employed persons can reduce their taxable income by the amount of any personal deductible super contributions they pay subject to age-based limits.

Plus, a lower rate of tax (15 per cent) is deducted from these personal super contributions, rather than up to 45 per cent for people in the highest income tax bracket.

For example, someone aged over 50 who contributes $50,000 of their income into super can reduce their taxable income by the same $50,000, only paying $7,500 tax on the contribution.

Make sure you don’t exceed the government’s contribution limits

If you are contributing more to your super before 30 June, be careful not to exceed the new annual limits. Penalty tax may apply if you do.

For the current 2009/2010 financial year, a $25,000 limit applies for concessional contributions ($50,000 for those aged 50 or over).

This is half the limit that applied last year, and applies to the aggregate of any personal deductible contributions you have made together with any employer super guarantee contributions paid on your behalf.

Get your contributions in before 30 June 2010

To be eligible for a tax deduction, contributions must be received at legalsuper by 30 June 2010. Contributions can be paid by cheque, BPay or EFT.

To check your eligibility for a tax deduction and to find out how much you can contribute within the cap, thereby maximising your tax deduction, please call legalsuper on 1800 060 312.

Government co-contribution. Don’t miss out!

If you earn less than $61,920 per annum, you may be eligible for the Government’s co-contribution scheme. Under the scheme, the Government could add up to $1,000 to your super by matching every $1 you pay into your account from your after-tax income.

Use our co-contribution calculator to find out how much money you are eligible to receive.

Don’t miss out this financial year.

By law you must pay your personal (after-tax) contributions to legalsuper no later than 30 June 2010.

Your payment options include:

• BPAY. legalsuper’s biller code is 29728. Please contact legalsuper on 1800 060 312 to obtain your unique reference number.
• Send legalsuper a cheque with your member number to GPO Box 4592, Melbourne VIC 3001.
• Organise for your employer to make contributions to legalsuper directly from your pay.

You don’t need to apply to receive the co-contribution

If you are eligible, once you have lodged your tax return, the Australian Taxation Office will automatically pay the co-contribution directly into your legalsuper account.

For more information on the co-contribution, including eligibility requirements, download this fact sheet or call 1800 060 132.

Test your risk-profile online

legalsuper has developed a new risk-profile calculator, to measure members' attitudes to investment returns and investment risk.

The online calculator will ask you to respond to a series of questions and suggests a legalsuper investment option that best suits your risk-return profile.

The most appropriate investment option can make a significant difference to the amount of super you accumulate and the level of risk to which your investment is exposed over time. For example, a 1 per cent difference in return could change the super you accumulate by up to 20 per cent over 30 years. However, higher risk investments are more likely to experience negative returns on a more frequent basis.

It's well worth checking your existing investment choice is aligned with your risk-return profile.

To review your risk-return profile go to www.legalsuper.com.au/riskcalculator

Share market update

Global share markets are likely to remain volatile for some time, according to legalsuper’s Asset Consultant, JANA.

“A number of broad external factors have been influencing share markets recently,” said David Holston, legalsuper’s lead consultant at JANA, “namely the impact of China’s tightening monetary policy, a pause in the US and European economic recovery, and the rise of sovereign debt concerns.

“China’s tightening appears a prudent step to avoid a market bubble,” said Mr Holston, “and the US and European central banks continue to provide extreme stimulus so the recovery is likely to resume.

“However, it is very difficult to price assets when concerns mount around government bond pricing, as they may not be risk free,” he added.

Mr Holston believes that the transfer of risk from the private sector to the public sector, and additional government spending to support economic growth, are now weighing on the creditworthiness of many government balance sheets.

“All these factors are combining to keep global share markets volatile into the near future,” Mr Holston said.

Latest investment returns

Returns for all legalsuper investment options to 31 March 2010 are listed below.

The above returns reflect the prevailing crediting rates at the time of writing and include interim rates for March 2010. Crediting rates change as updated information on investments comes to hand.

Note: The Cash and Balanced options were launched on 26 July 2008. Australian shares, Overseas shares and Socially responsible options were launched on 1 October 2005.

New super rules for employers

New super rules for employers in the legal services industry came into effect on 1 January 2010 under the new Legal Services Award.

The new rules apply to all legal employers, including barristers and solicitors, licensed conveyancers, and others who provide services or staff in support of legal services.

The Award requires that unless an employee chooses their own fund, employers must nominate a default fund from one of six super funds (legalsuper, Australian Super, Tasplan, CareSuper, Statewide Superannuation Trust or Asset Super) or any super fund to which the employer was making contributions prior to 12 September 2008.

These requirements apply unless a superior statutory instrument (e.g. a collective enterprise agreement) is in place. Legal employees covered by the Award include clerical and administrative staff, on-hire employees and law graduates.

For more information about your superannuation obligations under the Award, please download our Legal Services Award fact sheet.