Am I Entitled to Superannuation as a Contractor

Paying an additional amount equal to the SG rate to the contractor in addition to his usual salary does not count as a super contribution. To avoid super guarantee fees, you must pay the SG contribution to the contractor`s super fund on a quarterly basis. If you pay contractors primarily for their work, they are employees for the purposes of the Superannuation (SG) guarantee, and you may have to pay Super to a fund for them. 1. www.ato.gov.au/Business/Super-for-employers/Work-out-if-you-have-to-pay-super/ 2. www.ato.gov.au/business/super-for-employers/work-out-if-you-have-to-pay-super/super-for-contractors/ 3. www.ato.gov.au/business/super-for-employers/work-out-if-you-have-to-pay-super/super-for-contractors/ 4. www.ato.gov.au/Business/Super-for-employers/Paying-super-contributions/How-much-super-to-pay/List-of-payments-that-are-ordinary-time-earnings/ 5. www.ato.gov.au/business/super-for-employers/work-out-if-you-have-to-pay-super/super-for-contractors/#Supercontributionsforcontractors www.ato.gov.au/Business/Super-for-employers/Missed-and-late-super-guarantee-payments/The-super-guarantee-charge/ 6 On Monday 1 July 2021, the percentage of the pension guarantee (SG) set by the Australian Tax Office (ATO) increased from 9.5% to 10%. If your entrepreneur is eligible to choose a super fund, but does not, to avoid penalties, you will need to ask us for the details of their stapled super fund. Most employers know that they don`t have to pay super dues for the real entrepreneurs their company uses to provide a range of services. You need to answer several questions about the work arrangement between you and your employees to use the decision tool.

Once you`re done, you`ll receive a report indicating whether your employee is an employee or contractor for tax and super purposes, as well as the tax and super obligations you need to meet. If you or your company pay contractors for their work, they are considered employees by the ATO for THE PURPOSES of the SG, and you may have to pay Super to the fund chosen for them2. This does not change if the entrepreneur has an Australian Business Number (ABN). To decide who is an employee or contractor for exceptional purposes, you need to look at the entire employment agreement. This means looking at a number of factors – not just the terms of the written or oral employment contract. If a contractor is continually hired by a company and is paid primarily for their work, they can be considered an employee for exceptional purposes. The payment of an additional amount (in addition to his usual remuneration) to the entrepreneur up to the SG rate due will not be considered a pension contribution. They have to pay SG contributions each quarter directly to the super fund they choose to avoid super guarantee fees. A contractor who provides an NBA may still be subject to the retirement pension provisions if he or she works under a contract wholly or primarily for work. In this case, the “contractor” is considered an employee for retirement pension purposes, and the employer is required to make pension contributions on its behalf.

Notwithstanding this, a person performing work through an entity (company or trust) is not considered an employee for retirement pension purposes. To find out if you are eligible for super guarantee contributions, use: This increase applies to permanent and casual workers. However, as a company, the question arises as to whether there is an obligation to pay a retirement pension to entrepreneurs and, if so, how is the amount calculated? But simply calling someone a contractor – or asking them about their NBA – doesn`t release you from obligations under the Super Act to make Super Secured Contributions (SG) on their behalf. It doesn`t matter if the entrepreneur has an Australian Business Number (ABN). However, the work must be done personally by the contractor and not delegated to a subcontractor. Similarly, if the contractor is a business and one of its employees does the work for the customer, then that employee is not super paid by the customer. According to ATO, the main difference between an employee and a contractor is that: If you are a contractor who is paid in full or primarily for your work, you are considered an employee for super purposes and are entitled to super guarantee contributions under the same rules as employees. In general, employers are not required to pay a retirement pension to entrepreneurs who are bona fide entrepreneurs. However, it`s important to realize that simply calling someone a contractor or making sure they`re able to provide an NBA isn`t enough to determine that someone is actually a contractor.

According to ATO, as an employer, you must pay a retirement pension to a contractor if: Deciding who is a contractor and who is an employee is important when it comes to making large contributions to your employees. If you do it wrong, the ATO can impose some pretty costly penalties. Example: Employees for super guarantee purposes, no contractors You may still need to make super contributions for a contractor who provides an NBA if they work under a contract (oral or written) that is wholly or primarily for their work. In this situation, the contractor is considered an employee for super purposes and you need to make super contributions on their behalf. If your contractor is an employee for ILI purposes and is eligible for SG contributions, they are generally eligible to choose their own super fund. You must offer a selection of super funds to eligible entrepreneurs within 28 days of their launch date. The ATO continues to review and review contractual agreements. If they find that an “entrepreneur” is in fact an employee, they expect the corresponding pension obligations to be met. .