Superphobia…

Do you have clients who want their money now? “I wont live long enough to get my super!” They want the whole 100% in their hand, not just 91.53% ($91.53 + (9.25% of $91.53) = $100)…

Well maybe you can legally help them…

In ATO interpretative decision ATOID 2015/9 the Commissioner considers whether there are SG obligations when the personal services income rules apply. He asks whether attributed personal services income is ordinary time earnings (as is required before SG obligations apply).

The answer he comes to is, if the attributed income is not actually paid to the individual service provider in the year of income it is attributed to the taxpayer, then there are no SG obligations. As it is not “paid” he says it can’t be ordinary time earnings.

So if you really wanted to keep the 9.25% out of super, set up a personal services entity, get your personal service income paid into the entity, and don’t take it out in the year you earn it… 

You will be taxed on it at your individual rates as the income in the entity will be attributed to the individual and included in the individual’s tax return (rather than the 15% rate that the super fund pays… Maybe everyone earning less than $37,000 should do this once the low income super contributions ends on 30 June 2017????).

In the subsequent years, when it is paid to the individual out of the entity it will be exempt income (86-35 of the ITAA97).

But it does seem like a lot of effort to avoid some of your salary going into a low taxed super fund.

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About Ken Mansell

As a stay at home Dad most of the week this is my way of pretending I am still the tax counsel of ASX and SEC listed companies, working at big 4 firms, working at the Federal Treasury, on the Henry Review and at Parliament House for the previous government.
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