cash in Super or cash for ip?

[SOULFLY3]

Just wondering what people would think of this -
I am self employed so i have to put my own "super away" would i be better of not doing this and save it in a saveing or offset acc and put it towards another ip?
and my last question - my old boss owes me around 5k super (without intrest will be calling super ann) would i also be better saying to him give me that as cash and then i can also put that towards next ip?

or would ppl just put it in there super?

Thanks

 

[yo yo ma]

Depends on your age and goals... If you are nearing retirement, then superannuation is a tax-effective way to use your money. If you are younger and don't want to lock away the money until age 65, then it may be better to invest it where you can access the money.

 

[SOULFLY3]

23 so yeah id rather not pay into super, as my goal is to buy as many ips as possible kool

 

[Pushka]

and my last question - my old boss owes me around 5k super (without intrest will be calling super ann) would i also be better saying to him give me that as cash and then i can also put that towards next ip?

or would ppl just put it in there super?

Thanks

You dont get a choice; if it is the 9% Superannuation Guarantee you cant get your hands on it until you are of preservation age (at least 60 years). It must go into a Superannuation Fund

 

[s_t]

You dont get a choice; if it is the 9% Superannuation Guarantee you cant get your hands on it until you are of preservation age (at least 60 years). It must go into a Superannuation Fund

I suspect he is talking about an under the table - you give me the cash and I won't report you for not paying super type arrangement....

I am curious if anyone has (or knows of someone who has) had the fines etc applied to them (for not paying super to themselves) when they are directors of their own company?

 

[SOULFLY3]

yeah that wot i meant under the table sorta thing

 

[Pushka]

I am curious if anyone has (or knows of someone who has) had the fines etc applied to them (for not paying super to themselves) when they are directors of their own company?

We are Directors, and also PAYG employees. So we pay the 9%. Unless you are registered as a PAYG employee then I didnt think there are any penalties for not paying yourself any super.

 

[tigwelder]

I suspect he is talking about an under the table - you give me the cash and I won't report you for not paying super type arrangement....

I am curious if anyone has (or knows of someone who has) had the fines etc applied to them (for not paying super to themselves) when they are directors of their own company?

Yep, Me. Back in the early days i didn't pay myself super but in the last 6 years i have been. Have had to enter into a repayment agreement with the ATO where i pay them $650 a month and then they pay that money into my super fund . Circle of life. Really, Really hate being told what to do with my money. I employ others also these days and of course i pay all super etc. as required. Sometimes feel like building a raft and floating off to a deserted island where we are not bothered by super/workers comp/public liability/BAS payments, payroll tax etc. etc. etc. involved in running a business, takes a lot of the fun out of it some days.
Cheers, Geoff

 

[GreatPig]

If you are also the main or only shareholder, take funds out as dividends instead of salary. No super on dividends (that I've ever heard of anyway).

GP

 

[Pushka]

Hey GP, doesn't the company have to have returned profit (in previous years) before you can extract a dividend? Or is that only needed if you want Imputation Credt. I dont think Director's fees require a contribution either, it is only the PAYE system.

 

[s_t]

If you are also the main or only shareholder, take funds out as dividends instead of salary. No super on dividends (that I've ever heard of anyway).

GP

Yep, but wife is also a shareholder and have to distribute funds according to shareholdings (better for me to get the money). I guess we could sell to each other each year to get the ideal balance?

A LARGE Christmas bonus is another way - it isn't liable for super as it isn't related to work performed.

 

[SOULFLY3]

So basically if i asked my previous boss for the 5k under the table there is a chance one of us could get into trouble?

 

[Pushka]

You think???

I gather your boss hasnt said he would do it this way, but you are thinking of asking him? He has to account for the Superannuation Guarantee and can get fined heavily if he hasn't paid it; and it has to be paid into a recognised Superannuation Fund. The onus is on him to tick all the boxes.

Put it this way, as an employer I wouldnt do it.

 

[Ajax]

Greatpig,

I understand your point re company paying you dividends (where you then get the franking credits for tax already paid on the dividends by the company at 30%).

Have just been down this path with my one director one shareholder Pty Ltd company.

I also had an issue of the company having built up an asset being loans to director and the accountant was urging me to pay this back to the company. Is there a way around my accountants concern over the build up of these loans receivable from director-he kept talking about the risk of the ATO treating these as deemed dividends (I have used a loan agreement in the past that I think was good for 5 years specifying interest to be paid by me to the company on any loans to me from the company)? At least the company's balance sheet is now as clean as a whistle-no loans to directors.

I could have paid myself a dividend but this would be out of after-tax profits from the company. The company would need to pay the tax on profits at 30% firstly. The dividends would carry franking credits which I could have utilised in my personal return or carried forward excess frankign credits as carry forward losses where I was unable to use these in the current tax year.

The advantage for me of paying say a one off directors fee to myself was timing...my company return is submitted well before my personal return and the loans to director item in balance sheet was reduced. The disadvantage is that I needed to pay superannuation on the directors fees (within 28 days of the end of the quarter in which I received the directors fees).

Pity as I can (usually) earn more trading the sharemarket than most super-funds (at least on their recent performance).


Ajax

 

[s_t]

So basically if i asked my previous boss for the 5k under the table there is a chance one of us could get into trouble?

If you can get it your laughin, but as Pushka says, it be a brave/silly boss to agree to it. If found out he could have to cough up another 5k plus fees.

 

[SOULFLY3]

haha no worries i may ask him then, he was tightarse throughtout apprenticeship anyhow, as you can see he hasnt paid me for about last 3-4 years without interest, thats little ways he tryed jibbing his employees.
I will definately be calling super ann anyhow.