Where there’s a will

1. Susie Sumner, who owns a specialist hair salon for children - Junior Hairfashion - says she hasn’t contributed much to super, preferring to reinvest the money back into the business. But since she’s already 40-something, does it make more sense to boost her super?


2. Newly-divorced beauty salon owner Kerrie Gilmore wants to know what’s the best way to run her superannuation? Should she keep it with her ex-husband in their self- managed super fund or separate it?

Louise Biti, Technical adviser, Asteron: ‘Saving for retirement is something we should all consider more seriously as we get older. Small business owners always face difficulties in deciding whether to reinvest savings back into their business or to build up their super.

For Susie, superannuation should not be overlooked for the following reasons:

• Diversification – instead of relying on just one source (ie. your business) to provide your current income and your retirement funding


• Asset protection – if the unthinkable happens and your business fails, money saved in super (up to the Pension Reasonable Benefit limit of $1,238,440 in 2004/05) is protected in a bankruptcy situation. While this cannot save your business it does mean that retirement fund will not be lost.

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• Tax concessions - as a business owner you can either make personal deductible contributions to your super fund (if you operate as a sole trader or in a partnership) or you can salary sacrifice to super (if you operate through a company or trust). With the proposed abolition of superannuation surcharge from 1 July 2005, these amounts will only be taxed at 15% in the fund, rather than being taxed as income to you at your marginal tax rate (up to 48.5%). This is a tax saving up to 33.5%.

For Kerrie, if you decide to keep your superannuation in the self-managed superannuation fund with your husband, you will each be trustees of the fund. How well this works can depend on how you get on with your ex-husband. You need to consider if you still want to interact with him and are comfortable for him to have some control over the decisions related to your super. This could become more complicated if your ex-husband was to remarry and introduce his new wife as a member of the fund. The new wife would also become a trustee and combined, their votes could outweigh your vote.

If you continue with the self-managed fund, it may be important to ensure you have a binding death benefit nomination on your account (provided this is allowed under the fund’s trust deed). This would ensure that you choose who receives your benefits in the event of your death, rather than allowing your ex-husband to be involved in this decision.

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