If yes, then you may be liable to pay their Superannuation Guarantee contributions.

If you pay individuals under a contract that is wholly or principally for their labour, you have to make super contributions for them, even if they quote their ABN (Australian business number).

Generally, a contract is principally for labour if more than half of the dollar value of the contract is for a person's labour. This person is considered your employee for super guarantee purposes.

An individual's labour may include physical labour, mental effort or artistic effort. A contract may be considered 'wholly or principally for labour' if the individual:

  • is paid wholly or principally for their personal labour and skills
  • must perform the contract work personally and is not able to delegate
  • is paid for hours worked, rather than to achieve a result.

A contract for labour can be made either verbally or in writing.

Example

David's Caravan Park has a contract with Amanda, a freelance administrative assistant, to answer phones and do administrative work for 15 hours per week. The contract specifies that Amanda herself must perform the work. Amanda has an ABN and invoices David weekly for the hours she works. Amanda is considered David's employee for super guarantee purposes because:

  • their contract is wholly for the labour and skills Amanda provides as an administrative assistant
  • she performs the work personally
  • she is paid according to the number of hours worked.
There are significant consequences to you for not paying Superannuation Guarantee. For more details, tools and calculators, visit the ATO Website or talk to us at Tudor Investassure on 02 9417 6011 today.