Hi all,
My partner is a psychologist with 2 jobs, one where he is paid a salary and another as a sole trader working at a private practice. We are trying to work out the mechanics of how he should be contributing to his super from the sole trader income (he is not legally required to pay into his super from this income but wants to). A lot of the information on various websites is quite confusing in terms of differentiating between 'before tax' and 'after tax' contributions for sole traders.
The way his sole trader income is currently set up is:
- he gets paid a set fee per hour for a client session, for ease of calculations let's say it's $100 per client hour and $1000 per fortnight total (10 client sessions)
- he puts away a portion of the $1000 into a bank account for his quarterly tax bill (let's say $300) and then pays PAYG tax bill every 3 months
He'd like his super contributions to match the current super guarantee, I'll use 12% as that's what it's going up to this year.
Our question is:
* Should he be putting away $120 (12% of $1000, i.e., from pre-tax income) towards his super every fortnight or would it be $84 (12% of $700, i.e., from post-tax income)?
Would the former then be treated as a concessional contribution and if so, how is that taxed?
Comments on any other considerations welcome as well.
Thank you!
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