Super for Contractors: Do You Get Super on an ABN? (Decision Guide)

Many people assume that working on an ABN means no super entitlements. This isn't always true. Under the Superannuation Guarantee (Administration) Act, an employer must pay SG for any worker who is an employee for super purposes — and this definition is broader than the common law definition of employee.

Additionally, even genuine contractors may be entitled to SG if the contract is 'wholly or principally for the labour' of the individual. The Closing Loopholes Act 2024 further changed the test: courts and the ATO now look at the 'real substance, practical reality, and true nature' of the working relationship, not just the written contract.

This means that if a business engages you as a contractor but controls how, when, and where you work, you may actually be an employee entitled to 12% SG on every dollar paid — regardless of your ABN.

You're entitled to super even though you've an ABN in these situations. First: you're an employee disguised as a contractor (sham contracting). If you work set hours, use the client's equipment, wear their uniform, cannot subcontract the work, and have no real ability to negotiate rates or work for others, you're likely an employee regardless of what your contract says.

Second: your contract is wholly or principally for your labour. Under section 12(3) of the SG Act, if you work under a contract that's primarily for your personal labour and skill (not for a specific result or product), the person paying you must pay SG.

This commonly applies to: labour hire workers, IT contractors working on-site at a client, consultants embedded in a team doing ongoing work, and tradespeople working exclusively for one builder. Third: you're a company director. Directors are entitled to SG on director's fees.

You're generally not entitled to SG from your clients if you're a genuinely independent contractor running your own business. Indicators of genuine independence include: you control how and when the work is done, you provide your own tools and equipment, you can subcontract or delegate the work to others, you bear the financial risk of the engagement (fixed-price contracts, rectifying defects at your own cost), you've your own insurance, you invoice for completed work rather than receiving regular wages, and you work for multiple clients. If you're a sole trader or partnership running a genuine business, no one is obligated to pay you super — but you should seriously consider paying yourself super voluntarily (you can claim a tax deduction for personal contributions up to the $30,000 concessional cap).

If you are a Pty Ltd company contractor, the company can pay SG to you as a director/employee of your own company.

Sham contracting occurs when a business deliberately misclassifies an employee as an independent contractor to avoid paying SG, leave entitlements, and other employee benefits. Under the Fair Work Act, sham contracting carries penalties of up to $93,900 for an individual and $469,500 for a corporation per contravention. Under the Closing Loopholes amendments, the 'real substance' test makes it harder for businesses to maintain sham arrangements by relying on the terms of a written contract.

If you suspect you're being sham contracted, the key question is: could a reasonable person looking at the actual working arrangement (ignoring the contract) conclude you're an employee? If the answer is yes, you may have a claim for all unpaid employee entitlements going back up to six years, including SG, annual leave, personal leave, minimum award wages, and overtime. You can raise this with the Fair Work Ombudsman or the ATO.

If you are a genuine sole trader or self-employed person, there is no legal requirement to pay yourself super. But the tax benefits make it very attractive. Personal super contributions are tax-deductible up to the $30,000 concessional cap (after lodging a notice of intent with your fund).

For someone on a taxable income of $80,000, contributing $10,000 to super saves approximately $2,350 in tax (the contribution is taxed at 15% in the fund instead of your 34.5% marginal rate including Medicare). If you earn under $62,488, you may also qualify for the government co-contribution: contribute $1,000 of after-tax money and the government adds up to $500.

Self-employed people are the most under-saved cohort for retirement in Australia. Without compulsory SG, it's entirely on you to build your retirement savings. The sooner you start making regular contributions, the more decades of compounding growth you benefit from.