The ATO classifies contractors paid for their labour as employees for superannuation guarantee purposes. This is the case even if the contractor quotes an Australian Business Number (ABN).
Eligibility requirements Super contributions must be made for these individuals if you pay them:
Under a verbal or written contract that is wholly or principally for their labour- that is, more than half the dollar value of the contract is for their labour
For their personal labour and skills- which may include physical labour, mental effort or artistic effort and not to achieve a result
To perform the contract work personally – they must not delegate.
You do not pay super to a person when you make a contract with someone other than the person who will actually provide the labour, like a company, trust or partnership.
How much to pay The minimum super amount you have to pay is 9.5 per cent of each worker’s ordinary time earnings. For contractors, employees calculate the minimum super amount on the labour component of the contract. The ATO will accept their market values of the labour if the values of the various parts of the contract are not detailed in the contract.
The ATO reported that 45% of working Australians were not aware that they had multiple super accounts in 2016. Having multiple super accounts is particularly common for individuals who have had more than one job. If this is you, it is important to identify and manage your super accounts because having more than one can be costly as a result of account fees from multiple funds.To combat this, you may want to consolidate your super, which moves all your super into one account. Not only does this save on fees, but it also makes your super easier to manage and keep track of.
Before consolidating your super, it is important to do the following:
Research your funds’ policy Compare your active super accounts so you can make the right choice about which one you should close. Things to assess include:
Exit fees
Insurance policies
Investment options
Ongoing service fees
Performance of the funds
Check employer contributions Changing funds may affect how much your employer contributes, as some employers contribute more to certain funds. Check your current accounts to see if changing funds will affect this. Once you have selected a super fund, regardless of whether you choose a new super fund or one of your existing ones, provide your employer with the details they need to pay super into your selected account.
Gather the relevant information When consolidating your super, you will need to have the following details ready:
Your tax file number.
Proof of identity. This could include your driver’s license, birth certificate or passport.
Your fund’s superannuation product identification number (SPIN).
Your fund’s unique superannuation identifier (USI).
