Do sole traders have to pay super for themselves? A first-year guide

Here’s the idea in one sentence: as a sole trader, nobody has to pay super for you, including you, so if you want a retirement balance that keeps growing, you have to build the habit yourself.

Most new owners notice this a few months in. They check their super app, see that the last contribution came from their old employer, and wonder whether they’ve broken a rule. You haven’t. The ATO says plainly that sole traders and partners carry no super guarantee obligation for their own earnings. But “not required” quietly turns into “not happening” for a lot of people, and that’s the bit worth fixing in year one.

Why did my super stop when I went out on my own?

When you were employed, your boss had to pay super guarantee on top of your wages. That’s 12% of your ordinary earnings since 1 July 2025. It happened automatically, so you probably never thought about it.

The moment you became a sole trader, you stopped being anyone’s employee. The money you take out of the business is called drawings, not wages, and there’s no super guarantee on drawings. The rule hasn’t changed. You’ve just moved to the other side of it.

Quick check: is this guide about you?

• You trade under your own name and ABN, or in a partnership → yes, super is voluntary for you.
• You run a Pty Ltd that pays you a wage or director’s fees → different rule. The company generally has to pay super guarantee on that pay, just like any other employee’s. More on that below.
• You’ve hired your first worker → you must pay super for them. Since 1 July 2026, under Payday Super, that’s paid alongside each pay run rather than quarterly.

How much super should a sole trader pay themselves?

There’s no official figure, so pick a benchmark you can live with. The simplest is to copy what an employer would do: put aside 12% of what you pay yourself, or of your profit if you don’t draw a regular amount.

If 12% feels impossible in your first year, that’s normal. A smaller amount moved every week beats a big plan that never starts. Treat it like the tax jar you already keep for BAS and income tax: a separate account, an automatic transfer, and a rule that you don’t dip into it.

Your weekly drawings	12% “super jar” each week	Over a year
$800	$96	about $5,000
$1,200	$144	about $7,500
$1,600	$192	about $10,000

Illustrative figures, rounded. A guide, not a requirement.

Once the money is in the jar, you pay it into your super fund, either monthly or in a few larger amounts during the year. Check your fund holds your tax file number too. Without it, the ATO notes, the fund may knock back personal contributions.

How does the tax deduction for personal super work?

This is where most of the value sits, and where most first-timers trip.

When you pay money into super from your own bank account, it’s called a personal contribution. You can usually claim it as a tax deduction on your tax return. Once you claim it, the contribution is treated as concessional: your fund takes 15% contributions tax on it, instead of it being taxed at your personal income tax level. For many owners earning a decent profit, that gap is a real saving.

But the deduction only works if you do things in the right order.

The notice of intent: the step people miss

Before you can claim, you have to send your fund a notice of intent to claim a deduction, and the fund has to send back a written acknowledgement. The ATO’s instructions set the deadline as the earlier of:

1. lodging the return that covers the year of the contribution, or
2. 30 June of the next financial year after that one.

There’s a second trap. If you roll your super over to a new fund, or withdraw money, before sending the notice, the notice may no longer be valid for those contributions. So if you’re thinking of switching funds, send the notice and get it acknowledged first.

The safe sequence for a first-timer:

1. Make your contributions so the fund receives them by 30 June. Super counts in the year the fund gets it, not the day you hit “pay”.
2. Send the notice of intent to your fund. Most funds let you do it in their online portal; the ATO form works too.
3. Wait for the fund’s acknowledgement letter or email. Keep it.
4. Then lodge your tax return and claim the deduction.
5. Only after that, think about rolling over or consolidating funds.

Pop this on your first EOFY checklist so it doesn’t get lost in the June rush.

How much can I put in before I hit the cap?

Once you claim a deduction, those contributions fall under your concessional contributions cap, the yearly limit on before-tax super. According to the ATO’s contributions caps table:

Income year	Concessional cap
2025–26	$30,000
2026–27 (from 1 July 2026)	$32,500

That cap includes any employer super you still receive, for example from a part-time job on the side.

There’s a friendly extra for owners who had lean years. Had less than $500,000 sitting in super across all your accounts at the previous 30 June? Then leftover room from up to five earlier years can be added to this year’s limit, under the carry-forward rules. Unused amounts expire after five years, and the ATO uses the oldest ones first. Your available amounts appear in ATO online services through myGov. A very good year after a few quiet ones is when this tends to matter.

Is there free money for lower-income sole traders?

Sometimes, yes. It’s called the government co-contribution, and new businesses with modest first-year profits are often right in its range.

The idea in one sentence: when you top up super with after-tax money and leave it unclaimed at tax time, the government may chip in half as much again, to a maximum of $500.

For 2026–27, the ATO’s government contributions page lists a lower income threshold of $49,293 and a higher one of $64,293. Below the lower figure, the full $500 is possible; between the two it tapers away, and above the higher figure you get nothing. Two more conditions: a tenth or more of your income has to be earned by working (your business counts), and your tax return has to be lodged. You don’t apply; the ATO works it out.

Deduction or co-contribution? You can’t have both on the same dollars. Roughly:

• Lower profit year: a non-deductible contribution of up to $1,000 to collect the co-contribution often makes sense.
• Healthier profit year: the deduction usually wins.
• Not sure: ask your accountant before 30 June, while you can still choose.

An illustrative first year: Tess the hairdresser

Illustrative example only. Made-up person, simplified figures, not advice.

Tess left a salon job in July to rent a chair and work for herself. By October she realised her super had flatlined.

• She picked a benchmark. Drawing about $1,200 a week, she set a $100 weekly transfer into a “super jar” account, a bit under the 12% she used to get, with a plan to lift it after Christmas trade.
• She added it to her forecast. It went in her cash flow forecast as a fixed weekly line, next to her GST and tax jars.
• She paid the fund in May, early enough that it arrived well before 30 June.
• She lodged the notice of intent in early July through her fund’s app, waited for the acknowledgement, and only then let her accountant lodge her return.

Her profit came in around $62,000, near the top of the co-contribution range, so her accountant suggested claiming the deduction. In a leaner year, the co-contribution might have been the better choice.

The habit mattered more than the amount. By year two, the transfer was just part of the week.

If you’re juggling a super jar, a tax jar and the cost of growing, you can check your options with a real person in about a minute. Asking won’t touch your credit file.

Myths about sole trader super

“I’ll just put a lump sum in when I sell the business.” Maybe. But the yearly caps limit how much you can put in at once, and years of missed investment growth don’t come back.

“My accountant handles the deduction automatically.” Your accountant can claim it, but only after you send the notice and your fund acknowledges it. Many accountants will ask for the letter before they lodge.

“Super for myself is a business expense.” For a sole trader, it’s a personal deduction claimed in your individual return. It isn’t a business expense in the books.

“Paying super makes me look poorer to a lender.” Not usually. See below.

How does paying yourself super look to a lender?

When you apply for a first loan, lenders read your business bank statements to see how money flows. A super transfer can look good or messy depending on how you handle it:

• Steady and small (a weekly or monthly transfer): it reads as discipline. You’re planning ahead, not living hand to mouth.
• One big June payment that leaves the account nearly empty: it can make the business look tighter than it is, right when a lender is checking.
• Explained: voluntary super is something you could pause if you needed to. Mention that when a lender asks about your outgoings.

If you’re likely to move to a company soon, read our guide to going from sole trader to company, because super moves from optional to compulsory once the company pays you a wage. And if your second year brings a PAYG instalment notice, add it to the same weekly routine so all your “future money” jars fill together.

Building your own safety net? Let’s make sure the business has one too

Sorting out your own super is a sign you’re thinking like an owner: planning for the long run instead of the next invoice. The same thinking applies to the business. A buffer, a line of credit for the slow months or a loan for the next bit of equipment can stop a lean patch from emptying the super jar you’ve just started.

If you’d like to know what’s realistic for a business like yours, our enquiry takes about 60 seconds. It’s free of any credit check at this stage, so your credit file stays exactly as it is. We don’t pass your details around a pile of lenders, so there’s no flood of calls from strangers. A real person reads your answers, looks at your situation as a whole and calls you to talk it through in plain English. Please answer the form accurately, including how long you’ve been trading and what you take home, so the first option we suggest actually fits.

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