Guides / Do you have to pay super on contractor payments in Australia?
Do you have to pay super on contractor payments in Australia?
Yes, if the contractor is paid mainly for their labour: the ATO treats them as an employee for super, even with an ABN, and super is 12% of the labour part of their invoice. A contract with a company, trust or partnership is different: you do not pay super for the person they employ.
Last updated 8 Nov 2026. This is information, not tax or legal advice; check with the ATO or your adviser.
How the ATO decides who is an employee for super
The ATO says a contractor can be an employee for super even if they have an ABN. The question is whether they are paid mainly for their labour.
The ATO's contractor page gives three points to check:
- more than half the dollar value of the contract is for their labour;
- the payment is not dependent on achieving a specified result;
- the work cannot be delegated to someone else.
Read the full wording on the ATO page before you decide, because this guide cannot tell you how your own contractor is classified.
When a company, trust or partnership is the contractor
If you enter into a contract with a company, trust or partnership, the ATO says you do not pay super for the person they employ.
What the 12% is worked out on
For an eligible contractor, super is 12% of their qualifying earnings for the pay period. The rate is still 12% under Payday Super.
For a contractor, qualifying earnings are all the payments that relate to their labour. Payments for materials, equipment or other non-labour items are left out, and so is GST. The ATO says to calculate the super on the labour component of their invoice.
If a mixed contract does not show the labour part separately, the ATO page says you can use reasonable market value to work it out, and you keep records of how you worked it out.
| Line on the invoice | Amount | Counts for super? |
|---|---|---|
| Labour | $8,000.00 | Yes |
| Materials | $2,000.00 | No |
| GST | $1,000.00 | No |
Super is 12% of the labour amount: 12% of $8,000.00 is $960.00.
When the super has to reach the fund
Payday Super started on 1 July 2026. For a contractor, the super has to reach the fund within 7 business days after payday. If you pay a contractor by invoice, the payday is the date you pay the invoice.
Check the super and the date for each payment
Supercue reads a Xero payments or bills CSV in your browser, so the file is not uploaded. For the contractors you mark, it shows the super at 12% of the labour share you enter, with GST left out, and the date each payment must reach the fund. It does not decide whether a contractor is an employee for super, and it does not pay the super. It is free for your first 10 rows, then $19 a month.
Questions people ask
Does an ABN mean I do not pay super to a contractor?
No. The ATO says a contractor paid mainly for their labour can be an employee for super even if they have an ABN.
Do I pay super on materials or GST?
No. The ATO leaves out payments for materials, equipment or other non-labour items, and it leaves out GST.
What rate is super for a contractor?
It is 12% of their qualifying earnings for the pay period, which for a contractor means the payments that relate to their labour. The ATO says the rate is still 12% under Payday Super.
How long do I have to get the super to the fund?
Within 7 business days after payday. If you pay by invoice, the payday is the date the invoice is paid.
What if the contractor is a company?
The ATO says that if you enter into a contract with a company, trust or partnership, you do not pay super for the person they employ.