When Are Sole Traders Required to Pay Super?

Superannuation, often shortened to “super,” is Australia’s national retirement savings system. It helps individuals accumulate funds throughout their working lives to support them financially in retirement. A sole trader, in the Australian context, refers to an individual who owns and operates a business by themselves. This is the simplest business structure, where the individual and the business are considered the same legal entity. Sole traders use their individual Tax File Number (TFN) for business income and are personally responsible for all business aspects, including debts.

Understanding Superannuation for Sole Traders

Sole traders are generally considered self-employed for superannuation purposes, distinguishing them from employees who typically receive mandatory super contributions from an employer. Unlike employees, a sole trader does not have an employer making these contributions on their behalf as a standard obligation. This means the responsibility for contributing to their own retirement savings largely rests with the sole trader.

Employees in Australia have a legal entitlement to Superannuation Guarantee (SG) contributions from their employers. Sole traders do not have this same automatic entitlement for themselves, as a sole trader is not an employee of their own business in the same way a separate legal entity might employ its directors. Consequently, sole traders need to proactively plan and manage their own superannuation savings.

When Sole Traders Must Pay Super

A sole trader’s obligation to pay superannuation arises when they employ other people. If a sole trader hires staff, they become an employer and must meet the Superannuation Guarantee (SG) obligations for their eligible employees. This means contributing a percentage of an employee’s ordinary time earnings into their chosen super fund.

From July 1, 2025, the Superannuation Guarantee (SG) rate is scheduled to increase to 12% of an employee’s ordinary time earnings. This obligation applies to most employees aged 18 and over, whether full-time, part-time, or casual. For employees under 18, super must be paid if they work more than 30 hours per week. Contributions must be paid at least quarterly, with due dates typically 28 days after the end of each quarter.

Making Personal Super Contributions

Sole traders have the option to make voluntary personal contributions to their super fund. These contributions can be made in two main forms: concessional and non-concessional. Concessional contributions are made from pre-tax income and include personal contributions for which a tax deduction is claimed.

For the 2025-26 financial year, the concessional contributions cap is $30,000. These contributions are typically taxed at a concessional rate of 15% within the super fund, which is often lower than an individual’s marginal income tax rate. Sole traders can claim a tax deduction for eligible personal concessional contributions, which can reduce their taxable income. Non-concessional contributions are made from after-tax income and are not taxed when received by the super fund. The non-concessional contributions cap for the 2025-26 financial year is $120,000.

Superannuation Reporting and Record-Keeping

If a sole trader employs staff, they must maintain accurate records of superannuation guarantee payments made, including details of employee eligibility and the amounts contributed. These records are necessary to demonstrate compliance with Australian Taxation Office (ATO) requirements.

Employers are generally required to report superannuation information to the ATO through Single Touch Payroll (STP), which streamlines reporting of salaries, wages, pay as you go (PAYG) withholding, and super information. For sole traders making personal super contributions, keeping thorough records is important for claiming tax deductions. This includes maintaining a notice of intent to claim a deduction for personal contributions and receiving an acknowledgment from the super fund.