There are two types of Superannuation Contributions:
The most common way for employees to add to their SMSF balances is to use the 9.5% compulsory super contribution. Additional to this, you can also salary sacrifice to contribute into your SMSF.
For the self-employed, you can also add to Superannuation as a tax-deductible Superannuation contribution although this is not compulsory. The ATO definition of self-employed is that you earn less than 10% of your taxable income as an employee. In this case, there is a form to fill out to notify the Superannuation Fund (retail fund, industry fund or SMSF) of your intention to claim a tax deduction for your Super contribution. The Super Fund will then take this contribution as a concessional contribution (taxed at the concessional rate of 15%) and the Super contribution can be claimed as a tax expense in your personal tax return.
When looking at effective tax planning and promoters on how to effectively use Super, it is usually this personal contributions or Super salary sacrifice referred to. For more on this subject, directly from the ATO, click here.
The last option is to add after-tax money to your SMSF. The disadvantage is that you would have paid tax at a marginal rate (after-tax money), thereby, lose the concessional tax advantage of contributing into Super. However, this amount is considered as non-concessional contribution (and tax-free component) of your SMSF.
The tax form to complete advising your SMSF that you are making a self-employed Super contribution is called a Section 290-170 notice. You can follow the instruction to fill out the form.
