Superannuation tips for sole traders

Are you self-employed as a sole trader? Or are you a non-salaried partner or director?

Great! How much are you putting away for your super?

Come on, be honest?!

If you have not been paying into your own super, then you’re not alone. It’s quite common for sole traders to forget or avoid paying into their own superannuation.

In fact, data from the Association of Superannuation Funds of Australian (ASFA), shows that people who are self-employed often have lower super balances than employees. And even more worryingly, according to ASFA, approximately 20% of those who are self-employed have no super at all.

If you've been freelancing for a long time and haven't put super aside, now is a good time to start!

Sole traders and superannuation: what you need to know

Firstly, it’s important to know that paying yourself super is not necessarily compulsory.

If you’re self-employed, a sole trader or in a partnership, it is not mandatory to pay yourself super. So, any contribution you do make is your choice and a personal decision.

The only time you would be legally required to pay yourself would be if you’re employed by your business under a traditional PAYG setup i.e. you’re a director and you draw a wage from your own company.

However, be kind to your future self and prepare well for your own retirement. After all, you work hard in your own business, you deserve to earn good money and be able to save for retirement.

Benefits of contributing to your super as a sole trader:

  • You’re building up a nest egg for later for your retirement
  • You can claim your superannuation contributions as a tax deduction
  • You may save tax depending on your situation as super contributions are taxed at 15%
  • Super investments usually get better returns than bank savings accounts, so your savings will grow faster

You can visit the ATO’s website if you want to find out more in relation to super contributions for sole traders or contact our team at Counting Clouds.

How much super should you set aside as a sole trader?

Here’s our top 5 superannuation tips for sole traders, to help you maximise your contributions:

1. Make regular contributions

It is generally recommended that you put aside 10% of total income, if possible, because it seems a real shame to work so hard for yourself for years and then have nothing to show for it in the end.

There are limits to how much you can contribute each financial year (up to $27,500 in concessional contributions and up to $110,000 in non-concessional contributions) so just work out the numbers for your own personal situation. It can help to speak to a number wrangler just like the team at Counting Clouds. We offer an experienced accounts department that can advise you on superannuation as a sole trader.

You could also be eligible for a government superannuation co-contribution, which is an initiative by the Australian Government that supports low and middle-income earners to boost their super contributions.

2. Take advantage of tax benefits

And as well as building up a nice retirement nest egg, there are tax benefits to paying yourself super and any ways that you decrease your taxable income means you're saving up for your future self rather than paying the tax man.

If you do want to claim a tax deduction for any personal super contributions, you just need to advise your fund that you’re planning to claim a deduction, and then make sure your superannuation fund has your Tax File Number. Once you submit your tax return, you can then claim the deduction on any contributions you’ve made.

3. Repay any Covid withdrawals

If you've drawn down super during Covid you really should aim to pay it back ASAP. It's your money!

The good news is that since 1 July 2021 you can contribute back the amount you withdrew, and these amounts will not count towards your non-concessional contributions cap.

4. Look to consolidate your accounts

You should also look at consolidating super into one account so you're not paying fees all over the place. Many small business owners and entrepreneurs will have more than one job for a while as they grow their business, which can then result in ‘lost’ super.

You can find any lost super you may have by visiting the ATO’s online services through your myGov.

5. Take stock of insurance

Consider some of the insurances that come as part of your super (income protection, life insurance etc) as they can prove very useful in times of uncertainty. Whenever major life changes occur such as getting married, having a child, or buying a property, we recommend that you re-asses your insurance policies and update them as necessary.


At Counting Clouds, we like to provide a service that is relevant to your individual requirements. We'd love to hear from you if you have any questions about superannuation contributions, so please email us on [email protected] or join our mailing list to receive up to date financial news and tips.