Super for Sole Traders: Do You Have to Pay Yourself Super?

When you leave a job to work for yourself, the employer contributions to your super stop. Nothing replaces them automatically. That's the quiet cost of self-employment in Australia, and the ATO's rules on personal contributions are how you make up for it, with a useful tax deduction along the way.

Do sole traders have to pay super?

No. The ATO says that if you're self-employed as a sole trader or in a partnership, you don't have to pay super guarantee for yourself. If you employ staff, you'll generally have to pay super for them, but that's a separate obligation. For yourself, it's a choice.

Personal contributions and the tax deduction

You can make personal contributions from your after-tax income, for example by transferring money from your bank account to your super fund. Most people can then claim those contributions as a tax deduction until they turn 75. To claim, you must:

1. Give your super fund a notice of intent to claim, in the approved form.
2. Receive an acknowledgment from the fund.
3. Only then claim the deduction in your tax return.

Don't skip step two. Without the fund's acknowledgment, you can't claim. And the deduction can only be claimed in whole dollars.

How the deduction works: the ATO's example

In the ATO's own example, Christie puts 5,000 dollars into super as a personal contribution, sends her notice of intent and gets the acknowledgment. She claims a 5,000 dollar deduction, which brings her taxable income down to 30,000 dollars. Her fund pays 15% tax on the contribution, so 4,250 dollars lands in her account. She'd also be eligible for the low income superannuation tax offset, but not a co-contribution, because she claimed a deduction.

Deduction or co-contribution?

	Claim a deduction	Don't claim a deduction
How the contribution is treated	Concessional, taxed at 15% in the fund	Non-concessional
Your taxable income	Reduced by the contribution	Unchanged
Government co-contribution	Not eligible	May be eligible, if your income qualifies

The government co-contribution helps eligible low-to-middle income earners by matching personal contributions up to certain limits, and you don't have to apply. If your income is in that range, compare both routes before you send a notice, because you can't have both on the same contribution.

The TFN trap

Make sure your fund has your tax file number. The ATO says that if it doesn't, contributions are taxed an additional 32%, your fund may not accept personal contributions at all, and you may miss out on the co-contribution.

Choosing a fund

You can contribute to an existing fund from a past job or choose a new one. Whichever you use, make sure it has your TFN and accepts personal contributions, and keep the confirmation of each payment with your tax records. If you have several old accounts, tracking them down through ATO online services helps you see your full balance.

Caps and extra tax

Deductible contributions count towards your concessional cap. Go over it and you pay extra tax. Higher earners also face Division 293 tax when combined income and concessional contributions are over 250,000 dollars. If you're making large one-off contributions, check the current cap first.

Why it matters more for the self-employed

Employees build super without thinking about it, because their employer pays the super guarantee on top of their wages. As a sole trader, that only happens if you do it. Over a working life, years without contributions can leave a big gap. Treating super as a regular business expense, even a small percentage of each payment you receive, keeps it from slipping.

Timing your contributions

The deduction is claimed for the income year in which you made the contribution, and the Australian income year runs from 1 July to 30 June. If you want a deduction for the current income year, the money needs to reach your fund before the year ends, and the notice of intent and acknowledgment need to be sorted before you claim. Leaving it to the last week of June risks the payment arriving late.

Partnerships

The same rule applies to partners in a partnership: the ATO says you don't have to pay super guarantee for yourself, but you can make personal contributions and, in most cases, claim a deduction for them in the same way.

Over 75

If you're 75 or older, you can only claim a deduction for contributions made before the 28th day of the month after the month you turned 75. After that, deductible personal contributions are off the table.

A simple routine for sole traders

• Decide on a percentage of profit to put into super, and transfer it regularly.
• Before 30 June, total your contributions for the year.
• Send your fund a notice of intent and wait for the acknowledgment.
• Claim the deduction in your tax return.
• Check your fund has your TFN.

My verdict

Nobody will pay your super for you once you're a sole trader, so build it into how you pay yourself. The notice of intent step is the one people forget, so put it in your calendar for May each year. For more on working for yourself in Australia, see Amazon KDP in Australia and my honest freelancing tips.

Frequently asked questions

Do sole traders have to pay themselves super?

No. The ATO says self-employed sole traders and partners don't have to pay super guarantee for themselves.

Can sole traders claim super contributions as a tax deduction?

Yes. Most people can claim personal super contributions as a deduction until they turn 75, after giving a notice of intent and getting the fund's acknowledgment.

What happens if my super fund doesn't have my TFN?

Contributions are taxed an additional 32%, and the fund may not accept personal contributions.

Can I get a co-contribution if I claim a deduction?

No. A contribution you claim as a deduction isn't eligible for a co-contribution.

Do deductible contributions count towards a cap?

Yes. They count towards your concessional contributions cap.