Small business owners have found superannuation payments to be a “significant challenge”, a new survey from MYOB has revealed, with one in four small business owners not making any super payments.
It’s worse for the 58 per cent of businesses with revenue of less than $75,000. Among this cohort, nearly three in five businesses aren’t putting any money towards superannuation, citing the tax burden.
Head of customer marketing at MYOB Jane Betschel said superannuation can be confusing for some small business owners who may not understand their obligations as an employer and who may have changing workforce arrangements.
“With variations in full-time, part-time or casual staff, it can be hard to keep track of the required payments,” Ms Betschel said.
She noted that a quarter of those who weren’t making super payments were struggling with cashflow.
“Owner operators may sacrifice their own super payments to ensure that payments owing to staff are met. They may also decide to pay bills that will keep the doors open today, at the expense of future, personal financial security,” Ms Betschel said.
The future security is a concern, with 19 per cent of small business owners worried they won’t have enough money to fund their retirement.
That’s a bigger concern than the increasing cost of living (14 per cent) and reflects the fact that only 30 per cent of operators feel well or quite well prepared for their retirement.
MYOB’s findings follow similar warnings from AustralianSuper’s strategic policy advocate, Louise du Pre-Alba.
Speaking earlier this year, Ms du Pre-Alba said small business owners’ beliefs that they will be able to retire on the income from their business is an erroneous assumption.
“The evidence to date suggests that this is not happening enough to justify the current approach,” she said.
“Fewer than 4,000 taxpayers access small-business CGT concessions annually and only 1,000 of those utilise the CGT retirement exemptions by directing part or all of those proceeds to super.”
While it will be difficult, making superannuation compulsory for small business owners and self-employed workers would be a step towards addressing the issue, Ms du Pre-Alba argued.
“If we look at the labour market and the way it's changing, and the ways that different types of employed persons – whether they're fully employees, self-employed or certain types of contractors in the middle – provision for super, we think that the end result of that needs to change so that all people who are in a paid form of employment have the same experience of superannuation,” she said.