If you are self-employed in Australia — as a sole trader, contractor, or company owner-operator — you are generally not required to pay yourself the Superannuation Guarantee (SG). But the tax benefits of voluntary super contributions are significant, and building super is one of the most effective ways to save for retirement as a self-employed person.
Are Self-Employed People Required to Pay Super?
No — the SG only requires employers to pay super for their eligible employees. If you are a sole trader or work under an ABN without being an employee, no one is legally required to pay SG on your behalf.
Exceptions — you may receive employer SG if:
- You are engaged as a contractor but your contract is mainly for your labour (not results), and you work for one principal — the ATO may deem you an employee for SG purposes
- You are a company director receiving director’s fees — the company may be required to pay SG on those fees
- Your income is mainly from a single payer who controls how and when you work — the “employee vs contractor” line can be blurred
If you are unsure about your status, use the ATO’s Employee vs Independent Contractor decision tool.
How Self-Employed People Build Super
Since no employer will contribute on your behalf, you build super through:
1. Personal concessional (deductible) contributions
You transfer money from your bank account to your super fund, then claim it as a tax deduction on your tax return — equivalent to the tax benefit of salary sacrifice for employees.
Requirements:
- Under 75 years old
- If 67–74: meet the work test (40 hours in 30 consecutive days)
- Lodge a Notice of Intent to Claim a Deduction (NAT 71121) with your fund before lodging your tax return
- Annual concessional cap: $30,000 (FY2025–26)
The contribution is taxed at 15% inside the fund — which for most self-employed Australians earning $50,000–$200,000 is significantly less than their marginal income tax rate.
Example:
- Sole trader income: $120,000
- Marginal rate: 37% + 2% Medicare = 39%
- Contributes $20,000 to super as a concessional contribution
- Tax saving: $20,000 × (39% − 15%) = $4,800 less tax
2. Non-concessional (after-tax) contributions
If you have already used the $30,000 concessional cap or received a business sale windfall, you can make non-concessional contributions up to $120,000/year (or up to $360,000 via the bring-forward rule). No tax deduction is available, but earnings inside super are taxed at 15% vs your marginal rate.
3. Spouse contributions
If your partner earns below $40,000, contributing to their super gives you a tax offset of up to $540/year.
Super Funds Available to Self-Employed
Any fund that accepts member contributions is available to self-employed people. Unlike employees, you are not restricted to your employer’s default fund. Popular choices include:
- Large industry funds (AustralianSuper, Hostplus, Australian Retirement Trust) — low fees, strong long-term returns, accept direct member contributions
- SMSF — for those with larger balances wanting more control (but significantly higher running costs — see SMSF Costs)
How Much to Contribute — Practical Guidance
As a sole trader, you have more flexibility than an employee — but also more responsibility to set aside funds proactively. Some practical approaches:
- Set a percentage of income — for example, 12% (equivalent to the employee SG rate) — and transfer it to super quarterly
- Contribute a lump sum at year-end after your income is clearer — but ensure contributions are received by your fund by 30 June (not just paid by then)
- Use a business bank account buffer — treat super contributions as a non-negotiable expense, like BAS and income tax instalments
Tax Filing — What to Include
At tax time, self-employed people with concessional super contributions must:
- Ensure the Notice of Intent has been lodged with and acknowledged by the fund before lodging the return
- Claim the deduction at D12 (Personal superannuation contributions) in myTax or via your tax agent
- The contribution is deducted from assessable income — reducing the tax you owe
The fund will deduct 15% contributions tax from the amount contributed. The net tax saving is the difference between your marginal rate and 15%.
Carry-Forward Contributions — A Key Tool for Business Owners
If your business income has varied year-to-year and your Total Super Balance is under $500,000, you can use carry-forward concessional contributions — contributing more than the $30,000 cap by using unused cap amounts from the past 5 financial years.
This is particularly useful in high-income years: business owners who had low-income years previously can make large deductible contributions when income peaks.
See Carry-Forward Contributions Explained.
Super and Business Sale Proceeds
Selling a business can generate significant proceeds. The ATO offers specific small business CGT concessions that, in some circumstances, allow qualifying proceeds to be contributed to super as non-concessional contributions in addition to the standard caps:
- CGT cap amount ($1.78M for FY2025–26): Small business sale proceeds meeting the 15-year exemption or retirement exemption can be contributed under this separate cap
- These are complex rules — professional tax advice is essential before structuring a business sale with super in mind
For further reading: Personal Super Contributions Explained, Section 290 Notice of Intent, Carry-Forward Contributions, SMSF Guide. For advice tailored to your self-employment situation, speak with a licensed financial adviser or accountant through MoneySmart.