Super tips for small business owners and the self-employed

Contributions for you

If you’ve chosen a company structure (Pty Ltd) and receive wages, salary or directors’ fees from that company, then you are an employee. The company is required to pay SG contributions on your behalf.

If you’re operating as a sole trader or in a partnership, making personal contributions is optional.

Contributions for employees and contractors

No matter your business structure (company, sole trader or partnership), you need to pay super for eligible employees and contractors.

A worker is an employee if they serve in your business and perform their work as a representative of your business. An independent contractor provides services to your business and is working in their own business. It is possible to have employees even if you operate as a sole trader or a partnership.

Your worker is an employee if you:

• Control how, where and when the person works for you
• Pay them for the hours worked, a price per item/activity or on commission
• Provide most or all of the tools and equipment
• Don’t allow the worker to subcontract or delegate the work to another person.

If you have an employee, it is compulsory to pay super for them, withhold tax from their wages and provide them with payslips. You may also need to register for payroll tax and get a workers’ compensation insurance policy.

When you use contractors, you don’t have the usual obligations that apply to employees, but you may still need to pay super. If you employ a contractor mainly for their personal labour and skills (not for a specific result) and require them to perform the work themselves, then SG contributions are compulsory.

The required contribution is based on the labour component of the contract. You don’t need to pay SG on any contract payments for materials, equipment or GST.

When to consider voluntary personal contributions

According to research by AMP Bank, around half self-employed people don’t contribute to super. Missing out on the regular contributions most Australians receive from their employers can lead to lower super balances and a lower income in retirement.

If you have some spare cash, putting it in super will not only boost your final balance for retirement but can save you tax or get you an extra contribution from the government.

There are two types of personal contributions you can make.

1. After-tax (non-concessional)

A contribution that you don’t claim as a tax deduction is a personal after-tax (non-concessional) contribution. It won’t reduce your tax bill, but you may qualify for a co-contribution. The co-contribution is targeted at low- and middle-income earners with an income below $64,293 in 2026–27.

2. Pre-tax (concessional)

If you’re operating a company, you can send additional employer contributions to super on top of the required SG contributions. These employer amounts are tax-deductible for the company, just like your wages and compulsory super.

You can also choose to reduce the salary or wages you draw in line with the extra super you’re paying to offset the additional super contributions, which can lower your personal taxable income.

Alternatively, you can contribute from your personal bank account and claim a tax deduction. This reduces your taxable income, so instead of paying your marginal tax rate, you pay the 15% tax that applies to concessional super contributions.

If your marginal rate is higher than 15%, a tax-deductible contribution means more money left after tax is paid to invest for your future. Personal tax-deductible contributions are available to both company owners and sole traders or partners.

Insurance protection through super

An often-overlooked benefit of super when you’re self-employed is the insurance cover available through your fund.

Often, super funds can access better prices on death, total and permanent disability (TPD) and income protection cover than an individual, so purchasing insurance through your super fund can be cost effective.

Having premiums deducted from your super balance also means you don’t need to find the cash flow when money is tight.

Most large super funds automatically offer new members set levels of death and TPD insurance cover without needing to undergo a medical examination, and many also provide a basic level of income protection.

This automatic cover can be great for people who may not be able to obtain cover outside super due to age or ill health, but be sure to check all the terms and conditions. You may not be able to claim for a pre-existing condition for a year or two after automatic cover starts.