Sole Trader Superannuation: Contributions, Benefits & Tax Advice

If you’re operating a business as a sole trader, you might not have a lot of time to think about saving for retirement. However, there are certain situations in which business owners are legally obligated to pay themselves super—so it’s important to understand the rules. 

In this guide, we’ll provide information about sole trader superannuation regulations in Australia. We’ll provide answers to commonly-asked questions such as "Do sole traders have to pay super?" and provide tips for choosing a super fund that’s right for you.

How does superannuation work?

Superannuation, or "super", is a long-term savings system designed to help Australians build financial security for retirement. Super funds are designed to provide people with enough money to live comfortably in their retirement. 

Sole traders are not legally required to pay themselves super (although you can voluntarily pay yourself super if you want to). However, if you operate your business as a company and pay yourself a wage, you might be required to pay super to yourself. We’ll provide more detail about this in the next section.

Do sole traders need to pay superannuation?

If you’re operating a sole proprietorship and your business doesn't employ anyone, there’s no legal requirement to pay yourself super. However, it’s advisable to think ahead and make plans for your financial future. You can learn more about this in the ATO’s guide to Superannuation Basics. 

In circumstances where you operate your business as a company and pay yourself a wage, you may be required to pay yourself super. The ATO guide to Tax Obligations for Companies contains useful information about this. 

If your business employs other people, you must pay them super contributions under the Superannuation Guarantee rules. This includes contractors who are considered employees for super purposes. Failing to meet these obligations can result in penalties and additional charges from the ATO.

Find out more about sole trader super requirements here: Super for Sole Traders and Partnerships.

How much super should sole traders pay?

The superannuation guarantee percentage will rise to 12% on 1 July 2025 (up from 11.5%). This percentage is the minimum rate of an employee’s ordinary earnings that employers must contribute to their super fund.

In this section, we’ll explain how the superannuation guarantee applies to sole traders. We’ll also outline the various types of sole trader super contributions – so you can have a clear understanding of your options and obligations. 

Concessional super contributions

Concessional contributions are payments made into your super fund from your pre-tax income. For sole traders, this typically involves making personal contributions that you intend to claim as a tax deduction. These contributions are taxed at a concessional rate of 15% within the super fund, which is often lower than the marginal tax rate—making it a tax-effective way to save for retirement.

For the 2024–25 financial year, the concessional contributions cap is $30,000. This cap includes all before-tax contributions, such as employer contributions (if applicable), salary sacrifice amounts, and personal contributions claimed as tax deductions. If you exceed this cap, the excess contributions may be taxed at your marginal tax rate, with a 15% tax offset for the contributions already taxed within the fund. 

Additionally, if your total super balance was less than $500,000 at the end of the previous financial year, you may be eligible to carry forward any unused concessional cap amounts for up to five years, allowing you to make catch-up contributions in future years.

The ATO’s guide to Personal Super Contributions contains more information about this. 

Non-concessional super contributions

Non-concessional contributions are voluntary payments made into your super fund using after-tax income. Unlike concessional contributions, these are not taxed upon entering your super account, as the tax has already been paid. They can be an effective way to boost your retirement savings, especially if you've reached your concessional contributions cap.

The cap for non-concessional contributions is $120,000 (for the 2024–25 financial year). If your total super balance was less than $1.9 million on 30 June 2024, you may be eligible to use the bring-forward arrangement, allowing you to contribute up to $360,000 over a three-year period. However, if your balance was $1.9 million or more, your non-concessional contributions cap is nil for the current financial year, meaning you cannot make further non-concessional contributions without incurring additional tax. ​

Voluntary super contributions

Voluntary super contributions are any extra payments you choose to make – either concessional (before tax) or non-concessional (after tax) – to boost your retirement savings. For sole traders, these are especially important since they don’t receive employer-paid super. Making voluntary contributions can help grow your retirement savings and take advantage of the tax benefits available through the super system.

If you make concessional voluntary contributions (claimed as a tax deduction), you can reduce your taxable income, potentially lowering the amount of tax you pay each year. 

Choosing the right super fund

There are many reputable superannuation funds in Australia that offer super for self employed professionals. The ATO guide to choosing a super fund is a good place to start if you’re not sure which fund is best for your needs. 

When selecting a super fund as a sole trader, consider the following factors:

• Fees: Look for low fees to maximise your long-term returns.
• Performance: Compare long-term investment performance across funds.
• Investment options: Choose a fund that offers flexibility to suit your risk profile.
• Insurance options: Some funds offer life, TPD, and income protection cover.
• Access and service: Consider how easy it is to manage your fund online and the level of customer support.

You will also have to choose between an industry fund and a retail fund. These are the essential differences:

• Industry funds: These are typically not-for-profit, with lower fees and simple investment options.
• Retail funds: These are often run by financial institutions, offering a wider range of investment choices and services, though usually with higher fees.

Sole trader superannuation and tax deductions

As a sole trader, you can generally claim a tax deduction for any personal super contributions you make to your super fund, as long as you meet certain eligibility criteria and submit a Notice of Intent to Claim form to your fund. These contributions count as concessional contributions and are taxed at a lower rate of 15% within the fund, which may be less than your individual income tax rate.

When you’re paying super as a sole trader, claiming super contributions as a deduction can reduce your taxable income. To claim, include the deductible amount in your tax return after your fund has acknowledged your notice—helping you both grow your retirement savings and potentially receive a better tax outcome.

Please visit our guide on how your superannuation is taxed for more info.

Common mistakes to avoid

When managing superannuation as a sole trader, there are certain things you need to be aware of. Here are some common mistakes for sole traders to avoid:

• Forgetting to contribute to your own super: Unlike employees, sole traders aren’t required to pay themselves super—so it can be easy to overlook. This can be avoided by setting up regular voluntary contributions as part of your business budget.

• Missing contribution deadlines: Making late contributions may limit your ability to claim tax deductions for that financial year. Avoid this issue by scheduling payments ahead of 30 June and setting reminders.

• Exceeding contribution caps: Going over annual concessional or non-concessional limits can lead to extra tax. Make sure to track your contributions through your super fund or the ATO portal to avoid this mistake. 

• Failing to lodge a Notice of Intent to Claim: Without the Notice of Intent to Claim form, you can't claim your personal contributions as a deduction. For this reason, make sure to submit the notice before lodging your tax return.
• Choosing an unsuitable super fund: A fund with high fees or poor performance can impact your retirement savings. You can avoid this by comparing funds regularly based on fees, performance, and services.

How to make contributions to your super fund

You can make personal contributions to your super by transferring funds directly from your business or personal bank account into your nominated super fund. Most super funds provide BPay or EFT details to make the process simple. The Moneysmart guide to super for self-employed people is a good resource if you need more tips.

Accounting software such as QuickBooks Online is a great tool for sole traders—helping you track your super contributions, set reminders for regular payments, and generate reports for tax time. Using QuickBooks will ensure you're consistently contributing and making the most of your potential tax deductions—taking the hassle out of superannuation for sole traders.

Automate superannuation payments with QuickBooks

QuickBooks has innovative features designed to minimise paperwork and keep your business tax compliant. If you’re operating as a sole trader, super payments can be automated using QuickBooks Payroll. This will save you time while keeping your financial future on track. 

Our accounting software is trusted by small business owners around the world. Sign up for QuickBooks today and receive a 30-day free trial.