Want to start a side hustle? What about your super?
29 May 2023 5 min readKeen to start a side hustle as a podcaster? How about a food photographer? Or perhaps you already have a side hustle and are crushing it. Wherever you’re at, it’s worth thinking about your super. Sure, super might not be at the top of your priority list, but correctly setting up your finances will give you greater financial security.
If you have a part-time or full-time job plus a side hustle – what happens with your super?
If you work full-time, part-time or casually, you are entitled to superannuation. This means your employer should be making contributions (currently 10.5% of your earnings, increasing to 11% from 1 July 2023) to your elected superannuation account. Over time, your savings will grow, and when you retire, you will have money you can access from your account.
However, if you have a side hustle, you will not receive any contributions on that income – unless you arrange for that to happen. While it’s not compulsory, adding as much to your super savings as possible is a great idea. The longer your super is in your account, the longer the time frame for it to grow.
There are two ways you can top up your super on the income from your side hustle:
Salary sacrifice
You can ask your employer to deduct some of your salary and put it into your super account as an additional form of saving into superannuation. This is known as salary sacrificing or salary packaging. For most, the portion of your salary that goes into your super is taxed at a lower rate than your regular tax payments. Meaning you will pay less tax and boost your super savings at the same time – win! The extra amount you decide to move from your salary into your super account will depend on your income and the amount you can afford to put into your super. This option is tax effective if you are earning more than $45,000 per year.
Voluntary contributions
Another way you can boost your super is by making voluntary contributions to your superannuation account - known as non-concessional or after-tax contributions. You can make lump sum payments or regular amounts from your pay into your super. You would have already paid tax on this money, so you don’t have to pay tax again. You may also be able to claim a tax deduction. You can contribute up to $110,000 each financial year.
Making voluntary contributions can also mean that you can take advantage of the First Home Super Saver Scheme (FHSSS), a government initiative that can help you leverage your super balance to buy a house and save on tax.
What’s right for you?
There are benefits to salary sacrificing and voluntary contributions. Either way, you are securing your future and taking the income from your side hustle to spend as you like or save.
To get guidance that best suits you, speak to an NGS Super Specialist. Our Super Specialists are here to help. It’s free, and they can answer your questions about superannuation, investments or insurance.
Working for yourself
If you run your own business and are fully self-employed, you will not receive superannuation contributions unless you arrange to. While it’s not compulsory to make contributions to your superannuation fund if you’re self-employed, it’s an excellent idea. It may be hard to imagine life down the track, but the sooner you start saving your super, the better off you will be. Ignoring your super means you could get to retirement with little or no savings. Sadly, this does happen. Putting even a small amount aside now will set you up for the future.
Top tip: consolidate your superannuation
If you have worked in different jobs, you may have had different super funds. If you haven’t already, consolidate your super. Having one fund means you’ll only pay one set of fees.
Logging into your NGS Super account and ‘finding your lost super’ is easy. If you need assistance or have any questions, call the NGS Super Helpline on 1300 133 177.
Need help?
Sometimes super can seem complex, but it doesn’t need to be. Our Super Specialists make the conversation easy to understand. Why not connect with an NGS Super Specialist and start planning today for a brighter tomorrow?
You can also try out our tools like the NGS Super calculator.
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