Generally, super may be payable where:

• more than half the contract value is for labour
• the person is paid for their labour and skills rather than to achieve a specific result
• they must perform the work personally and cannot delegate it.

An ABN or regular invoices do not automatically remove your super obligations.

Where a contractor is engaged to deliver a defined result, or the contract is with a company, trust or partnership, the treatment may be different.

If a contractor is considered an employee for superannuation guarantee (SG) purposes, they will generally also be entitled to choose their super fund. Where super is payable, it is calculated on the relevant labour component and must be paid into the contractor’s super fund, simply adding an equivalent amount to their invoice payment does not count.

Don’t assume “contractor” means no super

If your business regularly engages contractors, it’s worth reviewing those arrangements to make sure your super obligations are being met.

Unsure whether you should be paying super for your contractors?

Momenta Books can help you review your bookkeeping and payroll processes and identify potential issues early.

This information is general in nature and does not take into account your individual circumstances. Consider obtaining professional advice relevant to your business.