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What you need to know about sole trader superannuation

Updated on 25 July 2024

4 min read

If you work for yourself, you may be wondering if you have to pay yourself super or not. And if so, how much you should pay. Learn more about making super contributions as a sole trader or self-employed person.

Man working on table

Do sole traders have to pay super?

The short answer is that it depends on how your business is set up.

  • If you're self-employed as a sole trader or in a partnership, it's your choice whether you'd like to make payments to your super.
  • If you're contracted as a sole trader from a business under a pay as you go (PAYG) scheme or you pay yourself a salary as an employee of your business, then you may need to pay yourself super by law.

You can work out if you have to pay super or not by using this guide from the Australian Taxation Office (ATO).

Paying super as a sole trader

Just because you don't have to make compulsory super contributions as a sole trader, doesn't mean you can't set yourself up for life after work.

You can choose to make personal super contributions to your super fund directly from your bank account as often as you'd like. And you may even be able to claim a tax deduction.

See the difference making payments to your super fund now could have on your retirement with our Superannuation Contributions Calculator.

How much super should I contribute as a self-employed person?

As a guide, employers pay at least 11.5% of an employee's ordinary time earnings to their super.

So as your own boss, you may want to use this as a starting point.

You can add more to your super, too. But before you do, it's a good idea to check the limits for how much you can contribute each financial year.

Some of the benefits of paying yourself super as a sole trader:

  • While it might seem like ages away, paying yourself super now can make a big difference to your financial future when you retire.
  • If you make after-tax contributions, depending on how much you earn, you may benefit from claiming a tax deduction.
  • Investment returns through your super fund are generally better than bank savings accounts and term deposits, so your money will grow over time.
  • You might have access to insurance cover (such as death, total & permanent disability, and income protection cover) through your super fund, to protect you and your loved ones if life doesn't go to plan.
  • If you're a low income earner, you may be able to get a bonus from the government.

Things to think about before making a self-employed super contribution:

  • Although you're setting up your future self by paying super now, you generally can't access the money until you reach the age you can access your super and retire.
  • You need to give your super fund your tax file number (TFN) before you can make a personal super contribution.
  • There's a limit to how much money you can pay into your super after-tax each year (called the non-concessional contributions cap). It's currently set at $120,000 for 2024–25.
  • If your total super balance is $1.9 million or more at 30 June 2024, you can't make after-tax super contributions in the financial year.

Choosing a super fund

Most people, including sole traders, can choose which super fund they'd like to join.

Your superannuation is meant to grow with you for your future. So, it's important to choose a super fund that helps you reach your goals.

There are many reasons to get your super working harder with ART, including:

  • Strong long-term investment returns1

  • Award-winning products and services

  • Focused on lower fees.

See how we compare

FAQs for sole traders and super

Like all employers in Australia, sole traders still need to pay the superannuation guarantee (SG) rate to their employees who are eligible.

The current SG rate is 11.5% of ordinary time earnings.

If you contribute to your super with after-tax money (also known as a voluntary contribution), you may be eligible to claim a tax deduction.

If you want to make sole trader super contributions to yourself, you can make a personal contribution from your bank account directly to your super fund.

Or check these other ways help grow your super.

If you're a sole trader and you're providing services as an independent contractor, you generally pay your own superannuation.

But that's not always the case. Here are some examples where the business who's contracted you needs to pay your super:

  • You're hired as a contractor mainly for your labour (more than half the dollar value of the contract)
  • You're paid for your labour and skills, not to achieve a result
  • You do the work yourself, not one of your employees

Set yourself up for the future

We can help grow your super while you grow your business. See how much better off you could be.

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Topics

Superannuation

Retirement
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1. Past performance is not a reliable indicator of future performance. Ratings and awards are only one factor to be taken into account when deciding to invest. Consider the Super Savings product disclosure statements (PDSs) and target market determinations (TMDs) before deciding.