Super for contractors
If you pay contractors mainly for their labour, they are employees for superannuation guarantee (SG) purposes and you may need to pay super to a fund for them.
It doesn’t matter if the contractor has an Australian business number (ABN).
Super contributions for contractors
Make super contributions for contractors if you pay them:
- under a verbal or written contract that is mainly for their labour (more than half the dollar value of the contract is for their labour)
- for their personal labour and skills (payment isn’t dependent on achieving a specified result)
- to perform the contract work (work cannot be delegated to someone else).
If you enter into a contract with a company, trust or partnership you do not have to pay super for the person they employ to do the work.
How much super to pay for contractors
The minimum super you must pay is the super guarantee percentage of the worker’s ordinary time earnings. This is the labour component of the contract. Do not include:
- any contract payments that are for material and equipment
- overtime for which the worker was paid overtime rates
- GST.
To avoid the super guarantee charge, you must make the SG contribution to the contractor’s super fund each quarter.
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