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Superannuation basics for business owners
Super from both sides of the desk: your obligations as an employer, how your own retirement saving works, and the general principles to discuss.
Business owners deal with superannuation twice. As employers, they must pay it correctly and on time for their staff, with real penalties if they do not. As individuals, they often have the least super of anyone in the business, because nobody pays it for them and every spare dollar goes back into the business. Both sides deserve attention.
This article covers the general rules. It does not tell you which fund or investment to choose; that is personal financial product advice, and it should come from a licensed financial adviser.
Your obligations as an employer
The superannuation guarantee
Employers must pay superannuation guarantee (SG) for eligible employees. The rate is 12% of ordinary time earnings, the rate that has applied since 1 July 2025. It applies to full-time, part-time and casual employees, and generally to directors who are paid a salary or fees by their company.
Some contractors count as employees for super purposes. If a contract is wholly or principally for someone's labour, SG may be payable even though the person has an ABN and sends you invoices. The label on the agreement does not decide it; the substance of the arrangement does.
Paying on time
SG must reach the employee's fund by the due date, and contributions are only counted as paid when the fund receives them, not when you press "send". Under the "payday super" rules, from 1 July 2026 employers pay super with each pay run rather than quarterly, and it must generally reach the fund within seven business days of payday. Confirm the current deadlines with the ATO or your adviser and build them into your payroll process.
What happens if you do not pay
Late or missed SG triggers the superannuation guarantee charge. It is made up of the shortfall, interest and an administration component, and it is not tax-deductible, unlike SG paid on time. The ATO can also issue director penalty notices, making directors personally liable for unpaid super. Missing super is one of the most expensive mistakes a small business can make, and one of the easiest to avoid.
Choice of fund and records
Most employees can choose their own fund. New employees must be offered a choice, and if they do not choose one, you may need to check with the ATO whether they already have a "stapled" fund before using your default fund. Keep records of what you paid, when and to which fund.
Your own super
Sole traders and partners
If you run your business as a sole trader or in a partnership, nobody is required to pay super for you. Any retirement saving through super is voluntary. Many owners intend to "catch up later" and find later never quite arrives.
Company and trust structures
If your company or trust pays you a salary, it must pay SG on that salary, just as for any employee. If you are paid only through dividends or trust distributions, there is no SG obligation, which is one reason the way you pay yourself matters. See paying yourself as a business owner.
Concessional contributions
Concessional (before-tax) contributions include SG, salary sacrifice and personal contributions you claim a deduction for. They are generally taxed at 15% in the fund, which is lower than many business owners' marginal tax rates.
Self-employed people and others can usually claim a tax deduction for personal contributions, provided they lodge a valid notice of intent with their fund and receive an acknowledgment before lodging their tax return or withdrawing the money. Missing this step is a common reason a deduction is denied.
All concessional contributions count towards an annual cap. In some circumstances, unused cap amounts from earlier years can be carried forward. The caps are indexed and the eligibility rules have conditions, so check the current figures before making a contribution, and stay within the contribution caps.
Non-concessional contributions
Non-concessional (after-tax) contributions are made from money that has already been taxed. They also have a cap, and eligibility depends on your total super balance. Exceeding either cap can result in extra tax.
Getting money out
Super is preserved until you meet a condition of release, such as reaching your preservation age and retiring, or turning 65. It is long-term money. That is the point, and it is also why it should be weighed against what the business itself needs.
Super and selling your business
When you sell an active business asset, the small business CGT concessions may reduce or eliminate the capital gain, if you meet the conditions. Some of these concessions allow amounts to be contributed to super, and in certain cases those contributions do not count against the usual non-concessional cap. The rules are detailed and the eligibility conditions are strict, so plan well before a sale rather than after it. If a sale is on the horizon, see our business sales and purchases work.
Balancing the business and super
There is a real tension here. Money in super is generally taxed more lightly, and it is usually protected from business creditors, but it is locked away. Money in the business can fund growth, but it is concentrated in a single asset. Most owners benefit from a deliberate balance rather than defaulting to one side.
A simple illustration: an owner paying themselves a salary from their company might decide each year how much to contribute to super within the caps, how much to keep in the business for working capital, and how much to hold personally as a buffer. The right split depends on age, income, debts and plans, which is exactly why it needs personal advice.
Pay your employees' super on time, every time. Then make a deliberate decision about your own, rather than leaving it to whatever is left over.
Self-managed super funds
Some business owners consider a self-managed super fund, sometimes so the fund can own the property the business operates from. This brings significant trustee responsibilities and costs. We outline the general concept in SMSFs and business real property; whether an SMSF suits you is a question for a licensed adviser.
Where personal advice comes in
Which fund to use, how your super is invested, what insurance you hold through super and whether to set up an SMSF are financial product decisions. They need advice from a licensed financial adviser who considers your full circumstances. We do not provide that advice, but we work alongside advisers on the business and tax side.
How we can help
We help business owners get payroll and SG obligations right, plan how they are paid, and understand how super fits into the wider business and tax picture. To talk it through, contact us or read about our accounting services.
This article is general information only and does not take into account your circumstances. It is not financial product advice. Speak to a qualified, licensed adviser before acting on it.