Owning a home is a great goal to have, not only because of the tangible and financial benefits of owning property, but also because it forms a core part of retirement wealth for an increasing number of Australians.
Buying a home can be more challenging for freelancers than for full-time employees, as irregular work and payments can make it trickier to get a loan. But with smart planning and saving it’s something that can be achieved.
For gig economy workers, it’s important to ensure your superannuation can support you when you cease working, especially considering self-employed workers have about half the superannuation balance of their company employee peers.
In Australia, employers are required to make superannuation contributions for all employees who meet eligibility criteria. If you’re self-employed or working in the gig economy, chances are the sole person responsible for paying your super is you.
Whether you’re eligible for super depends on the contract you have with an employer and it pays – literally – to check with the ATO whether you should be getting paid super and how much.
Laura Higgins from ASIC’s MoneySmart said sorting out your super as a freelancer comes down to having a plan and getting informed.
“As a freelancer, it’s even more important that you have a plan around your superannuation, though it may be more complicated. You may need to be paying yourself super, and you might find that you need professional advice.”
Freelancers earning a low income can benefit from new superannuation laws that were implemented last year. The Low Income Superannuation Tax Offset allows those earning less than $37,000 per year to make pre-tax contributions without the 15 per cent contributions tax being deducted. The refund is directly paid into superannuation by the federal government.
The First Home Super Saver Scheme is another incentive that was introduced to enable voluntary contributions to your super fund with the intention of saving for your first home.
From July 2018, it became possible to release the voluntary contributions in order to purchase your first home, based on eligibility criteria.
The proviso is that a maximum limit of $15,000 can be released in any financial year up to a total of $30,000 in entirety. This includes the earnings accrued on those contributions while in the super fund from investments and interest.
You can begin making super contributions on the scheme at any age, but you can’t apply to release any funds under the FHSS scheme until you’re 18.