You’ve started a sole trader business, the invoices are getting paid, and somewhere in the back of your mind a quiet voice pipes up: am I supposed to be paying myself super now? Is the ATO going to come knocking if I don’t?
The short answer is no, you’re not required to pay yourself super. But that’s not to say you shouldn’t – there are some great benefits to contributing to your own retirement that you should know about.
And for certain sole trader contractors, you may actually be eligible for the superannuation guarantee. It’s definitely worth checking to see if you qualify, as it could make a real difference to your super balance!
Sole traders don’t need to pay their own super
As a sole trader, you’re not an employee – you’re your own boss.
The super guarantee, the rule that makes employers pay 12% super on top of their staff’s wages, applies to employees (and some independent contractors – more on this in a sec). It doesn’t apply to you paying yourself. So technically, no, you’re not legally required to put a cent into super, and nobody’s going to penalise you for skipping it.
But while that could be a benefit of working for yourself, it’s also a catch: if you don’t pay yourself super, nobody else will either.
Independent contractors may be eligible for the super guarantee
Here’s the part that trips people up: If you work as a contractor under an agreement that’s wholly or principally for your labour – your time and skills rather than a set end product – the business hiring you may have to pay super on top of what they pay you, just as they would for an employee.
It’s important to note that this isn’t automatic, so it’s worth checking with the business you work for – or the ATO – if you think this might apply to you.
So why pay yourself super at all?
Optional doesn’t mean pointless. Without an employer quietly building your retirement fund in the background, your super only grows if you make it happen – and the sooner you start, the more time compound growth has to do the heavy lifting.
There’s a tax incentive, too. Contributions from your pre-tax income – concessional contributions – may be eligible for a tax deduction, and they’re taxed at just 15% inside your fund (or 30% if your income plus contributions tops $250,000) rather than at your marginal rate. So you could actually lower this year’s tax bill and top up your retirement fund all in one go!
📖 For more information, check out our full guide to paying super as a sole trader.
Automate saving for retirement with Hnry
The reason most sole traders skip super usually isn’t that they don’t want it – it’s that it’s one more manual job on an already long list. So why not automate it?
Set up a Hnry Allocation and we’ll forward a percentage of every payment you receive straight to your super fund. Because it’s percentage-based, you’re never setting aside more than you can afford. Easy!
Alongside your super, we’ll also:
- Calculate, deduct, and pay all your taxes – income tax, GST, and the Medicare levy – every time you get paid
- Lodge your tax and GST returns whenever they’re due
- Manage and claim your business expenses
- Chase up late-paying clients (politely!)
… and more!
For just 1% +GST of your self-employed income, capped at $1,500 +GST a year, Hnry takes care of the lot – so you never have to think about tax again. Join Hnry today!