Ask a room full of self-employed tradies whether they pay themselves super and you will get a mix of guilty shrugs, confident nods from people who are probably wrong about what they are doing, and a few honest "I have no idea" faces.
Superannuation for sole traders is one of the most misunderstood parts of running a trade business. The rules are actually straightforward - but the consequences of getting them wrong range from "you retire with nothing" to "the ATO charges you penalties that are not tax-deductible." Worth knowing which category you are in.
The short answer
As a sole trader you have no legal obligation to pay super for yourself. The Super Guarantee does not apply to you because you are not your own employee. The moment you hire anyone - full-time, part-time, casual, apprentice - you must pay 12% of their ordinary time earnings into super, quarterly, by the due dates. Miss a deadline and you pay a penalty that is not tax-deductible. There are no exceptions.
1. The sole trader situation - no compulsory super for yourself
Australia's Super Guarantee system requires employers to pay super for their employees. As a sole trader, you are not your own employee. You run a business, you take drawings from it, and the legal obligation to contribute to your own retirement does not exist.
This surprises a lot of tradies who assumed super was just something everyone had to pay. It is not. The ATO's guidance on super for the self-employed confirms it clearly: if you are self-employed, contributing to super is voluntary.
Which sounds like good news until you think through the implication. No compulsory super means no compulsory retirement savings. A tradie who runs their own business for 30 years without contributing to super reaches retirement with whatever is in their bank account and whatever equity is in their house, if they own one.
Plenty of tradies have done exactly that and regretted it. The voluntary part matters.
2. Why you should pay yourself super anyway
Super is a tax-advantaged savings vehicle. Contributions from your business into your personal super fund are generally tax-deductible as a business expense, and the earnings inside super are taxed at 15% rather than your marginal income tax rate - which for a tradie earning decent money is likely 32.5% or higher.
The maths over a career are significant. A tradie who puts $500 a month into super from age 30 to 65, earning an average return of 7% per year, ends up with around $900,000. The same tradie who puts nothing in has nothing. That is not a small difference in retirement quality.
To claim your personal super contributions as a tax deduction, you need to lodge a Notice of Intent to Claim a Deduction with your super fund before lodging your tax return for that year. Your accountant can handle this - just flag it with them.
3. The moment you hire anyone, everything changes
Take on an apprentice, hire a casual labourer for a week, bring on a part-time admin person - the Super Guarantee applies from their first pay. There is no grace period, no threshold to cross first, no "once they are permanent" delay.
The current Super Guarantee rate is 12% of each employee's ordinary time earnings, from 1 July 2025. The rate reached 12% and stays there - it stopped increasing after hitting this level.
Ordinary time earnings means their base pay and most allowances. It does not include overtime pay, though overtime worked as part of normal hours can count depending on the award. If you are unsure what counts for your employees under their award, the ATO's ordinary time earnings guidance covers it by award type.
Super is paid on top of wages, not out of them. If you hire a carpenter at $1,200 a week gross, their super is $144 per week on top of that $1,200. Budget for it before you advertise the role.
4. Does super apply to apprentices and casuals?
Yes, and this catches a lot of tradies out.
Apprentices are employees. Super applies from their first pay regardless of their year of apprenticeship or whether they are full-time or part-time. Their ordinary time earnings for the first year of a trade apprenticeship are lower than a qualified tradesperson, but the 12% still applies to whatever they earn.
Casuals are also covered. The $450 monthly threshold that used to apply to casuals was removed from 1 July 2022. A casual labourer who works two days for you earns $300 gross - super is owed on those earnings. No minimum hours, no minimum period of employment.
The only workers who fall outside the Super Guarantee are genuine contractors who provide their own tools, control their own hours, and run their own business - not workers you have engaged in a way that the ATO would classify as an employment relationship. If you are ever unsure which side of that line someone falls on, use the ATO's employee or contractor tool before you decide how to pay them.
5. When super has to be paid
Super must be paid quarterly. The due dates:
- Q1 (July - September): 28 October
- Q2 (October - December): 28 January
- Q3 (January - March): 28 April
- Q4 (April - June): 28 July
These are hard deadlines. Pay late and the Super Guarantee Charge applies - a penalty that covers the missed super, interest from the first day of the quarter it should have been paid, and a $20 administration charge per employee per quarter.
The SGC penalty is not tax-deductible. On-time super contributions are. That difference alone makes paying quarterly on time the obviously correct decision.
Super goes into each employee's chosen fund or your default MySuper fund if they have not nominated one. You need to offer new employees a choice of super fund within 28 days of starting, and since 1 November 2021 you also need to check whether they have an existing stapled fund with the ATO before defaulting them to your fund.
6. Setting up super as a new employer
Before your first employee's first pay run, you need:
- A default MySuper-compliant fund for employees who do not nominate their own. Most industry super funds offer an employer account - Construction Super, CBUS, and similar are common in the trades.
- An employer account with that fund. Takes about 20 minutes online.
- Access to the ATO's SuperStream payment system. Most employers pay through their accounting software or payroll system, which handles SuperStream compliance automatically.
If you use accounting software like Xero or MYOB, super calculations and lodgement are handled through the payroll module. It is not as manual as it sounds once the system is set up.
7. The conversation most sole traders avoid
Super is easy to deprioritise when you are running a trade business. There is always a more urgent bill, a material cost to cover, a slow week to get through. The logic of "I'll sort it out later" makes sense in the moment and compounds into a serious problem over twenty years.
The simplest system: treat super as a business expense rather than a personal decision. Every time you pay yourself, move 12% of that amount into your super fund. Not because you have to. Because 35-year-old you will be genuinely grateful that 65-year-old you does not have to pick up the tools again.
For the tax side of running a trade business, the guides on tax deductions most tradies miss and how to lodge your BAS cover the other areas where the ATO gets involved in your quarterly calendar.
Frequently asked questions
Do I have to pay myself super as a sole trader?
No. There is no legal requirement. As a sole trader you are not your own employee, so the Super Guarantee does not apply to you. That said, voluntary contributions to your own super fund are tax-deductible and the earnings inside super are taxed at 15% rather than your marginal rate. Not paying yourself super is legal. It is also a decision you will eventually have to live with.
What is the super guarantee rate right now?
12%, from 1 July 2025. The rate reached 12% and is now fixed at that level. For every $1,000 of ordinary time earnings you pay an employee, $120 in super is owed on top of that - it is an additional cost, not deducted from their wages.
When do I have to pay employee super by?
Quarterly: 28 October, 28 January, 28 April, and 28 July. Miss a deadline and the Super Guarantee Charge applies - it includes the missed super, interest, and an admin fee, and unlike on-time contributions it is not tax-deductible. There is no upside to paying late.
Does super apply to apprentices and casual workers?
Yes to both. Apprentices are employees - super applies from their first pay. The $450 monthly threshold for casuals was removed in July 2022, so even short-term casual work attracts super regardless of hours or earnings. If someone is on your payroll, super is owed.