Hi,
If a sole trader pays let’s say $20,000 in wages to his wife who works full time with him and the workload is 50/50, is it reasonable to also pay up to her concessional contribution cap ($30,000) for super? The business earns $90,000 taxable. Would the ATO deem $50,000 total a reasonable wage or is there a limit.
cheers.
Hi @Askerer1,
If your spouse is genuinely an employee, you also need to meet your obligations under workplace laws, including minimum pay rates and conditions where applicable.
For tax purposes, the total amount paid to your spouse must be commercially reasonable and reflect the work they actually perform in your business. The payment should align with market rates for similar work. You can use guidance from Fair Work Australia to help determine appropriate pay rates and conditions.
Also, it's a good idea to be aware that the current Superannuation Guarantee (SG) rate that employers must comply with is 12% of their employees' qualifying earnings.
When you're considering super contributions, it's good to be aware of the concessional contributions cap. From 1 July 2024, the concessional contributions cap is $30,000.
The concessional cap includes:
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