Superannuation for self-employed workers

If you're self-employed you're not legally required to pay yourself super, but it's a good idea to do so.

If you work for yourself, you can't rely on an employer to make payments towards your superannuation. Instead, this responsibility falls to you. It's not required by law that you pay yourself super, but it's hugely beneficial to make ongoing, regular payments towards your super in order to save for your retirement.

Let's take a look at the benefits of paying yourself super, the limits to how much you can put into your super and how to pay yourself super if you're self-employed.

AustralianSuper - Pre-mixed Balanced Super Fund Offer

AustralianSuper - Pre-mixed, Balanced Super Fund

AustralianSuper - Pre-mixed Balanced Super Fund Offer

  • 2019 Finder Awards Winner: Best Super Fund - Balanced
  • Join and consolidate your super with the easy-to-use mobile app
  • Australia's best performing growth fund over 10 years*
*To June 2019, according to Chant West. Investment returns are not guaranteed. Past performance is not a reliable indicator of future returns.
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Compare super funds to pay yourself super into

Name Product Past Performance - 1 Year Past Performance - 3 Years Past 5 year performance Calculated fees on $50,000 balance
1.21%
7.56%
7.84%
$467.65
The Balanced option is a pre-mixed, MySuper fund that invests in a diversified range of asset classes.
AustralianSuper is an award-winning industry super fund and is the largest super fund in Australia.
1.9%
7.51%
7.47%
$523
The Lifecycle Balanced option is a MySuper product that invests your super in a balanced fund until you’re near retirement.
Earn a Retirement Bonus of up to $4,800 when you open a new Income account. T&Cs apply.
2.85%
7.57%
N/A
$395
The Lifetime option is a MySuper product that adjusts your investment mix each 7-10 years as you get older.
QSuper is a member-owned super fund and is one of the largest super funds in Australia.
-1.36%
N/A
N/A
$358
The Lifestage Tracker is a MySuper product that invests in a range of asset classes in line with your age.
Earn Velocity Frequent Flyer Points for making contributions to your super. T&Cs apply.
1%
6.59%
6.39%
$598
The LGIA MySuper Lifecycle option aims for higher returns while you’re under 75.
LGIA is a medium-sized, member-owned super fund open to all Australians.
-0.22%
4.86%
5.43%
$603
The LifetimeOne investment option is a MySuper product that changes your investment mix as you get older.
A Catholic super fund open to all Australians and designed for people working in Catholic education, healthcare or aged care.
New Fund
New Fund
New Fund
$291.50
The Balanced Essentials fund invests in a range of shares, residential property and other assets and has a medium level of risk.
Superestate focuses on investing your super in physical residential properties and charges some of the lowest annual fees in the market.
1.14%
6.95%
6.73%
$549.42
This MySuper product will invest your super in a pre-mixed Growth fund until you’re 60, then it’ll switch to Balanced.
First State Super is a not-for-profit super fund with more than 750,000 members around Australia.
2.54%
7.21%
7.19%
$548.53
The Core Pool invests in a mix of asset classes and is an authorised MySuper product.
HESTA is an industry super fund open to all Australians and designed for employees in the health and community services sector.
-2.16%
5.03%
5.41%
$643
The MySuper Lifestage fund invests your super in a mix of asset classes depending on how old you are.
Westpac Group customers can manage their super alongside their day-to-day bank accounts.
1.84%
7.78%
7.87%
$565
The Growth fund is a pre-mixed investment portfolio and an approved MySuper product.
Cbus is a leading industry super fund for the building and construction industry, that’s open to all Australians.
1.73%
6.45%
7.24%
$682.65
The MySuper Balanced Growth option is a ready-made, diversified fund with a medium level of risk.
BUSSQ is an industry fund designed for the building and construction industry and open for all Australians.
-1.04%
4%
5.27%
$581.80
The Lifestage Fund readjusts your investment mix every few years to reduce your level of risk as you get older.
A retail super fund that offers access to personalised financial planning and advice.
2.17%
8.44%
8.32%
$621.76
The Balanced fund invests your super in a range of assets and is designed for high long-term growth.
An industry super fund open to all Australians with a focus on the hospitality and retail sector.
0.99%
6.43%
7.56%
$529.76
The Balanced option is a MySuper product that invests in a range of asset classes aiming for medium to high long-term returns.
MTAA is a national super fund available to all Australians with a focus on the motor trades and automotive sector.
N/A
N/A
N/A
$728
The Growth option is a diversified portfolio that aims for high growth over the medium to long term.
MLC is a large retail fund open to all Australians. MLC is the wealth management arm of National Australia Bank.
0.63%
6.23%
6.24%
$497.60
The Core Strategy is a diversified investment portfolio that balances risk and return, and is an authorised MySuper product.
REST is an industry super fund tailored towards the retail sector and open to all Australians with almost two million members.
0.88%
6.56%
7.45%
$361
The Balanced option is a MySuper product that invests in a mix of growth and defensive assets.
A flexible industry super fund for people who work in Australia’s higher education and research sector.

Compare up to 4 providers

The information in the table is based on data provided by Chant West Pty Ltd (AFSL 255320) which is itself supplied by third parties. While such information is believed to be accurate, Chant West does not accept responsibility for any inaccuracy in such information. Chant West’s Financial Services Guide is available at https://www.chantwest.com.au/financial-services-guide . Finder offers no guarantees or warranties about the data and we recommend that users make their own enquiries before relying on this information. Performance, fees and insurance data is based on each fund's default MySuper product. Where the performance, fees and insurance data for the MySuper fund vary according to the member's age, results for individuals between 40-49 years of age have been shown. Past performance is not a reliable indicator of future performance.

*Past performance data is for the period ending December 2018.

Why should I pay myself super if I'm self employed?

Some of the main benefits to paying yourself super are:

  • Save for retirement. The biggest benefit of paying yourself super is that you're saving for your retirement. Superannuation is designed to ensure Australians have enough money saved to fund their lifestyle when they're no longer earning a regular income. The more you have saved in super, the more comfortable your retirement will be.
  • You'll be less reliant on the Age Pension. Superannuation was created so Australians weren't relying on the Age Pension to fund their lifestyle after they've stopped working. The Age Pension is designed as a safety net or back up, but it shouldn't be relied on as an income source and it has strict eligibility criteria. If you pay yourself super while you're self employed, you're less likely to need to apply for the Age Pension.
  • You'll develop good money habits. Paying yourself super on a consistent basis, for example each month or each quarter, will help you develop and maintain good budgeting habits.
  • There are tax benefits to paying yourself super. There are tax benefits with paying yourself super. Super is taxed at the lower rate of 15% which, depending on what you earn, could be a lot lower than the standard rate of tax you pay. Because of this, you can actually claim tax deductions when you contribute to your super as a self-employed worker. We'll outline how this works in more details below.

Tax benefits of making super contributions as a self-employed worker

Super is taxed at the lower rate of 15%, unlike your regular income which can be taxed as much as 45% depending on how much you earn. Because you've already paid tax on your money before you add it to your super, and it will later be taxed again at 15% by your super fund, you're entitled to claim these contributions as a tax deduction. However, there are limits as to how much you can contribute to your super and claim as a tax deduction.

What are the super contribution limits if you're self employed?

The same contribution limits apply to self-employed workers that apply to all Australians. You can pay yourself up to $25,000 in concessional super contributions each year. Concessional contributions are the contributions you can claim as a tax deduction if you're self employed. If you want to contribute even more to your super you're welcome to do so, however you won't be able to claim any more than the $25,000 as a tax deduction.

How to pay yourself super when you're self employed

Paying yourself super is similar to making a standard bank-to-bank transfer online. You'll need to log into your online portal for your super fund to access your account. From here, you can select 'make a contribution' and simply enter how much you'd like to send to your super.

It's a good idea to set regular payment dates that suits you and your business. For example, a lot of Australian businesses pay their employees superannuation once a quarter (once every three months) so this could be a good idea for you too. But depending on your cash flow, you might decide to pay yourself super once every six months or even once a year instead.

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4 Responses

  1. Default Gravatar
    WillemJanuary 28, 2014

    Above you say there is no employer contribution for self-employed workers so it’s tax savings that are significant. Is this all that a self-employed worker gets?

    So if the worker gets less than the tax threshold each year or thereabouts there is really no point? He is basically just paying tax. Is this it?

    • Avatarfinder Customer Care
      MarcJanuary 28, 2014Staff

      Hi Willem,
      thanks for the question.

      Unfortunately I’m not able to comment on whether or not being self-employed is effective from a tax perspective. It should be known that self-employed workers also get super-related benefits such as the ability to claim a full tax deduction for super contributions, and I’ve emailed you a page from the ATO regarding this.

      I hope this helps,
      Marc.

  2. Default Gravatar
    JohnAugust 7, 2013

    Can a self employed person join an industry super fund if so which ones

    • Avatarfinder Customer Care
      ShirleyAugust 8, 2013Staff

      Hi John,

      Thanks for your comment.

      Yes, there are industry super fund options for the self-employed.
      Industry Superfund is one that offers services to the self-employed. Depending on what sector you’re in, there could be Retail funds and Public sector fund.

      Cheers,
      Shirley

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