Am I entitled to superannuation if I'm a contractor?

Superannuation (also known as ‘super’) is a compulsory savings scheme through which a portion of your income is set aside for the years following your retirement. Contractors are entitled to super if certain requirements are met.

For most Australian workers, your employer is required to make superannuation contributions on your behalf to a super fund of your choosing. These contributions are known as the super guarantee (SG).

The SG is the minimum percentage of your salary that your employer is required to pay into your super fund. In 2022 the SG is 10.5 per cent and is legislated to rise by 0.5 per cent each year, until it reaches 12 per cent in 2025.

Which contractors are eligible for super payments?

The Australian Taxation Office (ATO) asserts that if you’re a contractor paid wholly or principally for your labour, you’re considered an employee for super purposes and entitled to SG contributions under the same rules as salaried staff.

A contractor may be eligible to receive super from their employer if:

• under a verbal or written contract they’re paid wholly or principally for their personal labour and skills
• they perform the contract work personally - work cannot be delegated

Prior to 1 July 2022, contractors would have needed to have been paid at least $450 (before tax) in a calendar month to be eligible for super payments. However, this is no longer the case.

You’re entitled to superannuation even if you have an Australian Business Number (ABN).

Employers must pay super to eligible contractors, even if they:

• work full time, part time or on a casual basis
• receive a super pension or annuity while they're still working
• are a temporary resident
• work overseas
• are a company director
• are a family member working for the employer’s business

However, if an employer enters into a contract with a company (not simply an individual with an ABN), trust or partnership, they are not obligated to pay super for the person/s the company employs to do the work.

What other considerations are eligible contractors entitled to?

The ATO has a helpful tool to determine whether you are entitled to SG contributions from your employer.

Employers must offer eligible contractors a choice of super fund within 28 days of their start date. If you don’t select your own super fund an employee must contact the ATO to request your stapled super fund details.

The minimum super an employer must pay an eligible contractor is the SG percentage of the worker's ordinary time earnings (OTE). Generally, OTE is your gross (before tax) annual salary or wages. This is the labour component of the contract and does not include:

• any contract payments that are for material and equipment
• overtime for which the worker was paid overtime rates
• Goods and Services Tax (GST)

Your super contributions must be visible on your pay slips or remittance advice. Additionally, you can log on to your super fund’s website to view them or check your annual statement.

The ATO also has a page dedicated to busting the most common myths that can cause many businesses to get it wrong when working out whether a worker is an employee or contractor.

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