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Superannuation for self-employed workers

If you're self-employed you're not legally required to pay yourself super, but it's a really good idea to do so. Self employed super contributions work in much the same way as a standard employee, except you're managing it yourself.

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If you work for yourself, you're responsible for paying your own superannuation. You don't legally need to pay yourself super, but there are many benefits to doing so. There aren't any specific super funds for self-employed workers, instead you're free to join any open super fund that you'd like to. Our guide below will help explain what to consider when picking a super fund, and once your ready you can also compare some of the top performing super funds.

Promoted
Virgin Money Super Lifestage Tracker invests in a mix of assets in line with your age, investing in more growth assets while you’re young and reducing your risk as you near retirement. It has achieved a return of 10.07%p.a. over the last 5 years, with annual fees of $392.99 for a $50k balance.
Promoted
Green Company
Certified by the Responsible Investment Association Australasia.

This fund invests in renewable energy, innovative technology and sustainable products while avoiding coal, oil, tobacco and live animal exports.

Choose a super fund to pay yourself super

1 - 16 of 35
Name Product Last 1 year performance (p.a.) Last 3 year performance (p.a.) Last 5 year performance (p.a.) Last 10 year performance (p.a.) Fees on $50k balance (p.a.)

Virgin Money Super - LifeStage Tracker

Virgin Money Super - LifeStage Tracker
+17.29%
+13.78%
+10.07%
New Fund
$392
This is a high-risk investment option that aims to deliver higher returns over the long term.

Virgin Money Super LifeStage Tracker is a lifestage super product, so your mix of investments will be continually readjusted in line with your age. This means you'll be invested in more growth assets while you're young.

Australian Retirement Trust (formerly Sunsuper for Life) - Lifecycle Balanced Pool

Finder Award
Australian Retirement Trust (formerly Sunsuper for Life) -  Lifecycle Balanced Pool
+16.31%
+11.45%
+9.58%
+10.14%
$557
Sunsuper and QSuper have merged to create Australian Retirement Trust, one of Australia's largest super funds with more than 2 million members. Its Lifecycle Balanced product invests your super in a mix of growth assets, and reduces your risk when you're near retirement.

AustralianSuper - Pre-mixed, Balanced option

Finder Award
AustralianSuper - Pre-mixed, Balanced option
+15.02%
+12.42%
+10.31%
+10.66%
$472
AustralianSuper is an award-winning industry super fund and the largest super fund in Australia. The Balanced fund invests in a mix of different assets like shares, property and cash.

Australian Ethical Super Balanced

Green Company
Australian Ethical Super Balanced
+13.19%
+12.82%
+9.71%
+9.78%
$622
Certified by the Responsible Investment Association Australasia.
Australian Ethical seeks to invest in companies that have a positive impact on the planet, people and animals, such as renewable energy and healthcare while avoiding investments in coal, oil, tobacco and gambling.

QSuper Lifetime - Aspire 1

QSuper Lifetime - Aspire 1
+12.67%
+10.33%
+9.03%
New Fund
$385
QSuper is part of Australian Retirement Trust. QSuper Lifetime automatically adjusts your investment mix in line with your age and your Lifetime account balance. Eligibility criteria and conditions apply to open a QSuper account (refer to 'More Info').

Aware Super High Growth

Aware Super High Growth
+18.15%
+14.45%
+11.63%
+11.83%
$694
This is a high-risk investment option that aims to deliver higher returns over the long term.
If you join Aware Super's default MySuper Lifecycle option your super will be invested in the High Growth option while you're under 55, giving more exposure to local and international shares.

Australian Catholic Super Lifetime - Grow

Australian Catholic Super Lifetime - Grow
+13.2%
+10.02%
New Fund
New Fund
$488
A Catholic super fund open to all Australians and designed for people working in Catholic education, healthcare or aged care.The Lifetime One fund option changes your investment mix as you get older.

AustralianSuper - Socially Aware

AustralianSuper - Socially Aware
+14.97%
+10.9%
+9.05%
+10.1%
$501
The AustralianSuper Socially Aware option doesn't invest in Australian or international companies that directly own coal and fossil fuel reserves, produce tobacco or those which have single-gender boards.

Bendigo SmartStart Super - Growth Index

Bendigo SmartStart Super - Growth Index
+14.46%
+12.38%
+9.08%
+10.4%
$338
Bendigo SmartStart is a retail super fund. The Growth Index Fund is the default MySuper option for members under 55.

Kogan Super - Enhanced Indexed Growth

Kogan Super - Enhanced Indexed Growth
+14.81%
New Fund
New Fund
New Fund
$332
Kogan Super offers low-fee, high-performing indexed investment options that are managed by Mercer, Australia's largest super administrator. The Enhanced Indexed Growth product invests around two thirds of your balance into Australian and global shares.

Australian Catholic Super Bonds

Australian Catholic Super Bonds
-1.66%
+3.98%
+3.87%
+3.83%
$278

Australian Catholic Super Conservative

Australian Catholic Super Conservative
+6.86%
+6.56%
+5.55%
+6.17%
$463

Australian Catholic Super Conservative Balanced

Australian Catholic Super Conservative Balanced
+10.43%
+8.31%
+6.77%
+7.47%
$478

Australian Catholic Super Growth

Australian Catholic Super Growth
+15.54%
+11.3%
New Fund
New Fund
$488
This is a high-risk investment option that aims to deliver higher returns over the long term.

Australian Ethical Super Australian Shares

Green Company
Australian Ethical Super Australian Shares
+14.35%
+20.21%
+13.81%
+15.36%
$842

Australian Ethical Super Growth

Green Company
Australian Ethical Super Growth
+17.1%
+14.16%
+10.66%
+11.21%
$807
This is a high-risk investment option that aims to deliver higher returns over the long term.
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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 and fee data is for the period ending December 2021.

Superannuation rules when you're self-employed

If you're an employee, your employer is legally required to pay you super guarantee payments. But if you're self-employed, for example a sole trader, freelancer or contractor, you don't have an employer to pay you super. You're not legally required to pay yourself super, but it's a good idea to do so.

Employers are required to pay employees super at a rate of 10% on their annual earnings. If you're self-employed and choose to pay yourself super, you don't have to meet this same amount and can instead pay yourself less (or more) than this. However, the same contribution limits apply to self-employed workers.

Self employed super contributions limits

The same contribution limits apply to self-employed workers that apply to all super fund members.

You can pay yourself up to $27,500 in concessional super contributions each year. Concessional contributions are the contributions you can claim as a tax deduction if you're self employed. This means the money will be taxed in the super fund at the rate of 15% instead of your income tax rate.

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 $27,500 as a tax deduction. You can contribute up to an additional $110,000 to your super each year as non-concessional contributions. This means the money will be invested with the rest of your super balance and will benefit from investment returns, but, it'll be taxed at your incomes tax rate.

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.

You also need to remember to lodge a 'notice of intent to claim a tax deduction' form with your super fund before the end of the financial year when you're doing your tax return. This is to ensure your super fund is aware that they need to tax your contributions within the fund.

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.

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.

What's the best super fund for self-employed workers?

There are no specific funds that are dedicated to self-employed people. Instead, you're free to join any super fund that's open to the public. The best super fund for self-employed workers will have the the following features:

  • Low fees. The less you pay your fund in fees, the bigger your balance will be at retirement.
  • Good long-term performance. When comparing super fund performance, look for a fund that has consistently achieved high returns over the long term (that is, over the past 5,7 and 10 year periods).
  • Insurance options. Depending on what industry you're in, you might have specific insurance needs. Compare the default insurance cover and the additional insurance options when choosing a fund.

If you want a bit more help choosing a fund, you can take a look at Finder's best super fund picks to get you started.

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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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