Super when you work for yourself

The problem

The ATO’s own data shows the median super balance at retirement for self-employed Australians is less than half that of employees. The reason is simple: no one else is paying it for you.

The rule that makes it work

Since 2017, anyone can claim a tax deduction for personal super contributions — no 10% rule, no employment test. That means as a sole trader or contractor, you can:

1. Transfer money from your business account to your super fund during the year
2. Lodge a Notice of Intent to Claim a Tax Deduction with your fund before you lodge your tax return
3. Claim the deduction on your tax return, reducing your taxable income
4. The fund taxes the contribution at 15% (same as salary sacrifice)

Worked example — Mark, IT contractor

Mark earns $140,000/year as a sole trader. His marginal tax rate is 32% (30% + Medicare). He contributes $20,000 to his super by 30 June.

• Contribution: $20,000
• Contributions tax (15%): $3,000
• Income tax saved at 32%: $6,400
• Net tax benefit: $3,400
• Net into super: $17,000

Mark has shifted $20,000 from his taxable income into his super and ended up $3,400 better off than if he’d paid income tax on it. Repeat every year and he catches up with employed peers fast.

The concessional cap still applies

The $30,000 annual concessional cap covers all contributions taxed at 15% — including personal deductible contributions and anything a company you work through is paying as SG. Add them up before making the final contribution for the year.

Carry-forward is gold for self-employed

Income as a sole trader is often lumpy — two strong years followed by a slow one. Carry-forward lets you catch up using unused cap from the previous five years (if total super balance was under $500k at 30 June prior). This is especially useful in a year where you’ve had an unusually high income.

Three common mistakes

• Forgetting the Notice of Intent. Without it lodged before you lodge your tax return, the contribution isn’t deductible — it’s treated as non-concessional.
• Contributing after 30 June and trying to claim in the prior year. Only contributions received by the fund before 30 June count for that financial year.
• Paying yourself super from a company you own. If you operate through a Pty Ltd, you’re technically an employee and the company should be paying SG from your wages. Talk to your accountant about the cleanest structure.

Government top-ups you may also qualify for

• Co-contribution — up to $500 if income under $60,400
• LISTO — automatic $500 refund of contributions tax if income under $37,000
• Spouse contribution offset — if your partner makes a contribution on your behalf and you’re low-income