Subcontractor Superannuation Calculator Australia

You have to pay super for a subcontractor when their contract is wholly or principally for their labour. If the subbie supplies the majority of materials and equipment for the job, you generally don't have to pay super. However, if you're hiring a painter who just rocks up with a brush and a roller, or a sparky doing a rough-in using your cable, that's principally labour — and super applies. The ATO looks at the substance of the arrangement, not just how the contract is worded.

For the current financial year (FY 2026-27, which started 1 July 2026), the Super Guarantee rate is 12.0% of the ordinary time earnings base. If you pay a subbie $1,000 for a week's work and they aren't registered for GST, the super payable is $120. If they are GST registered, you calculate super on the GST-exclusive amount, so $1,000 ÷ 1.1 = $909.09, making super $109.09.

It depends on whether the subcontractor is registered for GST. If the subbie charges you GST (meaning they're registered and their invoice includes a GST component), you only pay super on the GST-exclusive portion. If they're not GST registered and don't charge GST, you pay super on the full gross amount. Always check whether their invoice shows an ABN and a GST line — that tells you what you need to know.

If you miss a super payment deadline, the ATO slugs you with the Super Guarantee Charge (SGC), which includes the original super shortfall, a nominal interest component of 10% per annum, and an administration fee of $20 per worker per quarter. The real kicker is that the SGC is not tax deductible, unlike regular super contributions which are. For repeat offenders, the ATO can apply Part 7 penalties on top, which can double or even quadruple the amount owed.

Yes, if the contract is wholly or principally for the supply of the subcontractor's labour, you are required to pay super. "Labour-only" is the textbook example of when super applies. If a chippy turns up to your building site and you provide all the timber, fixings, and scaffolding, that subbie is working under a contract principally for labour, and super is your obligation. The more materials the subbie supplies themselves, the less likely super applies.

The easiest method for small businesses is the free Small Business Superannuation Clearing House (SBSCH) operated by the ATO. You register online, enter your subbies' details and their nominated super fund, and make a single bulk payment. The clearing house then distributes the super to each worker's fund via SuperStream. Alternatively, you can pay directly to each subbie's super fund, but you must comply with SuperStream data standards when doing so.

The Super Guarantee rate for FY 2026-27 is 12.0%. This rate reached its final legislated cap of 12.0% on 1 July 2025 and remains at 12.0% for the 2026-27 financial year and beyond. Unlike prior expectations of a rise to 12.5%, the rate has stabilized, giving businesses a predictable super obligation.

Sole traders are not legally required to pay super for themselves — it's entirely optional, though highly recommended. The mandatory super obligation only kicks in when you pay workers (employees or eligible subcontractors). That said, the tax benefits of making voluntary contributions to your own super fund are significant, and our <a href="/salary-to-contractor">salary to contractor calculator</a> can help you see how factoring in self-funded super affects your charge-out rate.

No, a subcontractor cannot opt out of receiving super if they are engaged under a contract that is principally for their labour. It's a legal obligation on the payer, not a choice for the worker. Even if the subbie says "don't worry about super, just pay me cash," you're still liable. The ATO doesn't accept "the subbie told me not to pay it" as a defence, and you'll cop the SGC penalties if you're audited.

The old $450-per-month threshold was scrapped effective 1 July 2022. Before that date, employers and contractors didn't have to pay super if a worker earned less than $450 in a calendar month. Now, there is no minimum earnings threshold — every dollar of eligible earnings attracts super, regardless of how small the payment is. Even a one-off $100 payment to a labour-only subbie triggers a super obligation of $12.00 at the current 12.0% rate.

Starting 1 July 2026 under the new "Payday Super" legislation, employers and principal contractors are required to pay super guarantee contributions at the same time they pay their workers' wages. Contributions must land in the worker's super fund within 7 business days of the payday. This replaces the old quarterly payment system, helping to ensure subcontractor super is paid in real-time.

Yes, super contributions you make on behalf of subcontractors are tax deductible as a business expense, provided you pay them on time. The critical detail is that if you miss the ATO deadline and get hit with the Super Guarantee Charge, that SGC amount is not deductible. So paying on time doesn't just avoid penalties — it also preserves your tax deduction. Use our calculator above to stay on top of your quarterly obligations and protect your deductions.