In certain circumstances super must be paid for independent contractors who are deemed to be employees for superannuation purposes.
Generally, there will be a superannuation guarantee liability for amounts paid to contractors when all three of the following conditions exist:
- The individual contractor is remunerated for a labour component of more than 50% (i.e. materials make up less than 50% of the total contractor’s price);
- The individual contractor must perform the contractual work personally (there is no right of delegation); and
- The individual contractor is not paid to achieve a result – i.e. the amount paid is in relation to hours worked, not a fixed sum on completion of the job.
Other contractors for whom superannuation contributions must be paid:
- A sportsperson, artist or entertainer paid to perform, present or participate in any music, play, dance, entertainment, sport, display or promotional activity, or similar activity
- A person is paid to provide services in connection with any performance, presentation or participation in these activities
- A person is paid to perform services related to the making of a film, tape, disc, television or radio broadcast.
Note that if you enter into a contract with someone other than the person who’ll actually provide the labour – for example, with a company, trust or a partnership – you don’t pay super to the person providing the labour.
To view further detail from the ATO about independent contractors and superannuation, click here.