Super contributions for independent contractors
If you pay independent contractors mainly for their labour, they are employees for superannuation guarantee (SG) purposes. You may need to pay super to a fund for them.
It doesn't matter if the independent contractor has an Australian business number (ABN).
Make super contributions for independent contractors if you pay them:
- under a verbal or written contract that is mainly for their labour (more than half the dollar value of the contract is for their labour)
- for their personal labour and skills (payment isn't dependent on achieving a specified result)
- to perform the contract work (work cannot be delegated to someone else).
Example: employee for super guarantee purposes, not an independent contractor
David's Caravan Park has a contract with Amanda, a freelance administrative assistant, to answer phones and do administrative work for 15 hours per week.
The contract specifies that Amanda herself must perform the work. Amanda has an ABN and invoices David's Caravan Park weekly for the hours she works. Amanda is an employee for SG purposes because:
- her contract is wholly for the labour and skills she provides
- she is paid according to the number of hours worked
- she performs the work herself.
David's Caravan Park needs to pay SG contributions for Amanda in addition to her pay.
End of exampleIf you enter into a contract with a company, trust or partnership, you do not have to pay super for the person they employ to do the work.
Example: independent contractor, not employee for super guarantee purposes
Harry's Hobby Shop wants to paint their new shop. They contract Pete's Paints for the job. The entire job is completed by one painter from Pete's Paints.
- The contract is between Harry's Hobby Shop and Pete's Paints.
- Harry's Hobby Shop paid Pete's Paints to achieve a result.
- The painter is not an employee of Harry's Hobby Shop for SG purposes.
Harry's Hobby Shop does not have any SG obligations for the painter or Pete's Paints. This is the case even if Pete is a sole trader and does the work himself, because he was contracted to achieve a result.
Pete's Paints may have SG obligations for the painter.
End of exampleFor more information, see:
- employee or independent contractor information to work out if an independent contractor is an employee for super purposes
- work out if you have to pay super for additional information on eligibility.
Offering independent contractors choice of super fund
If your independent contractor is an employee for SG purposes and entitled to receive SG contributions, they are generally eligible to choose their own super fund. You must offer eligible independent contractors a choice of super fund within 28 days of their start date.
If your independent contractor is eligible to choose a super fund but doesn't, then to avoid penalties you must request their stapled super fund details from us.
Paying an additional amount equal to the SG percentage directly to the independent contractor, on top of their usual pay, does not count as a super contribution. To avoid the super guarantee charge, you must make the super contribution to the independent contractor's super fund by the relevant deadline.
Super for independent contractors on earnings from 1 July 2026
From 1 July 2026, to avoid the super guarantee charge, you must make super contributions equal to at least the SG percentage of the independent contractor's qualifying earnings on-time and to the right fund.
All payments that relate to the independent contractor's labour (whether undertaken during or outside of any ordinary hours of work) are included in the independent contractor's qualifying earnings. This includes any payments for overtime.
Do not include:
- contract payments that are for materials, equipment or other non-labour items
- GST.
Super for independent contractors on earnings paid up to 30 June 2026
For quarters ending on or before 30 June 2026, to avoid the super guarantee charge, you needed to make super contributions equal to at least the SG percentage of the independent contractor's ordinary time earnings.
The ordinary time earnings for independent contractors was generally the labour component of the payments made under the contract.
Do not include:
- contract payments that were for materials, equipment or other non-labour items
- overtime for which the independent contractor was paid overtime rates
- GST.
Labour and non-labour components of a contract
If a contract covers both labour and non-labour items, the value of each should be detailed separately. If it isn't, you can use reasonable market value to work out the amount of the payment that is for the independent contractor's labour. We'll consider normal industry practices. You must keep records showing how you worked out the labour part of the payment.