A common assumption among Australian business owners is: “They have an ABN and send me an invoice, so they are responsible for their own super.” Unfortunately, it is not always that simple.
For super guarantee purposes, the ATO looks at the substance of the arrangement. Some independent contractors must still receive super where the contract is wholly or principally for their labour.
An ABN does not decide the issue
An ABN is a business identifier. It does not, by itself, determine whether a worker is an employee, an independent contractor, or an employee for super guarantee purposes.
The ATO specifically notes that businesses may have to pay super for an individual contractor even where that contractor quotes an ABN.
When might super be payable to a contractor?
Broadly, an individual contractor may be treated as an employee for super guarantee purposes where they are paid under a contract that is wholly or principally for their labour.
Relevant features can include that the person is being paid mainly for their personal labour and skills and must personally perform the work rather than being free to delegate it to someone else.
Example: an ABN but super may still be payable
Consider a freelance administrative worker who has an ABN, invoices weekly, is paid for hours worked and is required to personally perform the work. The ATO provides a similar example in which the worker is an employee for super guarantee purposes because the contract is for the person’s labour and skills, the worker is paid according to hours worked and must do the work personally.
The important point is that invoicing through an ABN does not automatically make the super obligation disappear.
When might you not have to pay the individual's super?
The position can be different where your contract is with a company, trust or partnership rather than directly with the individual. The ATO states that if you enter into a contract with a company, trust or partnership, you generally do not have to pay super for the person that entity employs to perform the work.
Similarly, a genuine contractor engaged to achieve a specified result, operating their own business and able to arrange how the result is delivered may have a different outcome. The complete working arrangement needs to be considered.
Employee vs contractor still matters
Super is only one part of worker classification. Businesses also need to correctly determine whether a worker is genuinely an employee or independent contractor. The ATO says the whole working relationship and the terms and conditions of the arrangement need to be considered.
Simply calling someone a contractor in an agreement, requiring them to obtain an ABN, or asking them to invoice the business does not override the true nature of the relationship.
Why getting it wrong can be expensive
If a business was required to pay super and fails to do so correctly or on time, it may become liable for the super guarantee charge and associated compliance consequences. The cost can therefore be significantly greater than simply paying the correct super in the first place.
What changed from 1 July 2026?
Payday Super commenced from 1 July 2026. Employers now generally need to make super guarantee contributions each time they pay eligible employees, with contributions required to reach the employee’s super fund within the applicable timeframe.
The new timing rules also apply to workers who fall within the extended employee definition for super purposes, including relevant independent contractors paid for their labour. This makes correct worker classification even more important.
Questions to ask before deciding “no super”
Before treating an individual contractor as outside super guarantee, consider questions such as:
- Who is the contractactually with— the individual, a company, trust or partnership?
• Is the payment mainly for the person’s labour and skills?
• Must that individual personally perform the work?
• Can they delegate or subcontract the work?
• Are they being engaged to produce a specific result?
• How are they paid — hourly, daily, or for a completed result?
• What does the written agreement say, and does it match what actually happens in practice?
The key takeaway
ABN does not equal “no super”.
A contractor can have an ABN, issue invoices and still be an employee for super guarantee purposes in particular circumstances. Businesses should review the actual working arrangement rather than relying on the label used by the parties.
Need help reviewing your contractor arrangements?
If your business regularly engages contractors, reviewing the arrangements before a super issue arises can save significant time and cost.
Elite Plus Accounting can assist businesses with reviewing the accounting and super implications of contractor arrangements and identifying areas that may require further advice.
Elite Plus Accounting
From Chaos to Clarity.
1300 744 733
www.eliteplusaccounting.com.au
Disclaimer
This article contains general information only and does not constitute taxation, superannuation, employment or legal advice. Worker classification and super guarantee obligations depend on the particular facts and contractual arrangements. Obtain professional advice relevant to your circumstances before acting.
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