Do contractors get super?
Generally, contractors and subcontractors are not paid super by their clients. However, where an individual contractor provides personal labour or skills to a company, then the contractor may be entitled to receive super, on top of their fee, even if they quote an ABN.
When is a contractor more like an employee?
If a contractor is engaged by a business on an ongoing basis, and is paid mainly for their labour, then they may be regarded as an employee for super purposes.
However, the work must be personally done by the contractor, not delegated to a subcontractor. Likewise, if the contractor is a company, and one of its employees does the work for the client, then that employee is not paid super by the client.
Common mistakes to avoid
The most frequent mistake is assuming that super does not need to be paid for a contractor. It’s an easy error to make, but an expensive one if a company gets it wrong, because the ATO does make it simple to work out the difference.
Other mistakes to avoid include:
- Paying super on the whole value of the contract when some of it is not labour
- Paying the 9.5% extra direct to the contractor. The super payment needs to go to a super fund to meet the requirements of the Super Guarantee laws.
- Paying super for a contractor when they’re not doing the work themselves. This often happens with long-term contractors, where the contractor started by doing the work themselves but then changed the arrangement over time.
Can contractors and the self-employed join TWUSUPER?
Yes. Contractors and self-employed workers can definitely join TWUSUPER - just choose the button 'Owner operator'. Over the last 15 years, we have outperformed the average retail fund and, as an Industry Super Fund*, we are run only to benefit members.
Contractors need to join TWUSUPER online themselves (unlike employees who receive Super Guarantee and can join TWUSUPER through their employer).
Need more answers?
If you still have any questions about super for contractors, give us a call between 8am and 8pm (AEST/AEDT) weekdays on 1800 222 071.
If you’re an employer who is contributing to TWUSUPER for your other employees, you can contact your TWUSUPER Account Manager directly.
*DISCLAIMER: Past performance is not a reliable indicator of future performance and should never be the sole factor considered when selecting a fund.
Comparisons modelled by SuperRatings, commissioned by TWUSUPER and shows average differences in net benefit of TWUSUPER's balanced investment option and the main balanced options of retail funds tracked by SuperRatings, with a 5 (119 options), 10 (57 options) and 15 (19 options) year performance history, taking into account historical earnings and fees – excluding contribution, entry, exit and additional adviser fees. Outcomes vary between individual funds. Modelling as at 30 June 2020. See Assumptions for more details about modelling calculations and assumptions. Consider your personal financial situation, needs and objectives, which are not taken into account in this information, and the TWUSUPER Product Disclosure Statement (PDS) available at www.twusuper.com.au before making an investment decision. TWU Nominees Pty Ltd, ABN 67 002 835 412, Australian Financial Services Licence 239163 ('TWUSUPER') as trustee of the TWU Superannuation Fund (ABN 77 343 563 307).