Tips on superannuation for gig economy workers

The term ‘gig economy’ has become well-known in regard to the way many of us work, and working in the gig economy and offering a service, has become the norm for many Australians to make a living. Also known as the 'on demand workforce' broadly consists of self-employed people who find work on a task or contract basis. Often these jobs come through purpose-built apps, such as rideshare, food delivery, dog walking, babysitting, and DIY help.

If you consider yourself part of the gig economy, then you’re part of an increasing amount of people who make their living this way. So, what does that mean when it comes to managing your super?

 

Working in the gig economy

If you’re new to gig work, there are a few things you should be aware of, for example, superannuation for contractors works a little differently to what you might be used to. 

For a start, when it comes to being paid, you’re considered to be self-employed. In fact, according to a 2019 study commissioned by the Victorian Department of Premier and Cabinet, 40% of gig economy workers don’t even know how much they’re being paid an hour. Additionally, gig workers spend, on average, 4.9 hours per week on unpaid activities, such as searching and bidding for work1

Unlike a traditional employer-employee arrangement, on-demand workers not entitled to a range of benefits, including sick pay, annual leave and superannuation. 

This leaves the responsibility of putting money into your super and saving for retirement with you, the worker. 

 

Do you have to make your own super contributions?

Most gig workers are paid per job, and not as part of a company’s payroll. Meaning, in the eyes of the Australian Tax Office (ATO), you’re considered self-employed or a sole trader. As such, you generally don’t have to make super guarantee payments to yourself2. So any super you pay will be up to you, rather than a legal requirement. 

READ MORE: ATO – DO YOU NEED TO PAY YOURSELF SUPER

 

Should you pay yourself super? 

If super’s not a legal obligation, you might wonder why some gig-workers, contractors and freelancers pay it to themselves.

Most people will live in retirement for at least 25 years. It’s a substantial amount of time, often referred to as ‘the next third’. How much super you’ll need in retirement can depend on a few factors. For example, what kind of retirement do you want? For example, do you want to travel the world, buy a new car, and pay off a mortgage? Or do you want a simpler life? The reason this is important to think about is that it’ll help determine how much money you’ll need in retirement, and could help you plan how much you’ll need to contribute to your super over your working life.

AustralianSuper’s super projection calculator can help give you an idea of what your future income will look like, with and without super. It can also show you how adding a small amount extra each year could make a big difference to your retirement lifestyle down the track.

EXPLORE YOUR FUTURE: SUPER PROJECTION CALCULATOR

 

Check if you’re eligible for a Government superannuation co-contribution or a tax deduction


Tax deductions for any super contributions  

Many gig-workers will be able to claim a tax deduction for contributions they make to their super.

There are 2 main types of contribution for the self-employed: concessional and non-concessional.

Concessional contributions: In some cases, you can claim a tax deduction for personal contributions (known as concessional contributions)3 you make to your own super. These contributions should come from your before-tax income, and can be up to $25,000 per year. You can continue to claim these concessional tax deductions until you turn 75, although if you’re over 67 you’ll need to satisfy the ATO’s work test. 

Non-concessional contributions: You can also make additional contributions of up to $100,000 per year, from your after-tax income, but this isn’t tax-deductible. This is called a non-concessional contribution. 

Before you make any extra contributions, you should consider your debt levels as well as current and future financial commitments.

READ MORE: CONCESSIONAL CONTRIBUTIONS – ATO.GOV.AU

DOWNLOAD: CLAIMING A TAX DEDUCTION (PDF)


Government co-contributions

If your income falls under $53,564 (before tax) for the financial year of 2019 – 2020, you may qualify for government support. The Government will match 50 cents for every $1 that you add to your super from your after-tax income up to a maximum amount. This could mean up to a $500 contribution from the Government, depending on your income. This co-contribution gets paid directly into your super account after you’ve lodged your tax return for that year.

Check the ATO’s website to see if you’re eligible. 

READ MORE: MAKING AFTER-TAX CONTRIBUTIONS

 

Government super co-contribution income thresholds

 YOUR TOTAL INCOME* YOUR CONTRIBUTION CO-CONTRIBUTION
$39,837 $1,000 $500
$45,837 $600 $300
$51,837 $200 $100
$54,837 Any amount $0
Source: ATO – Co-contribution income thresholds
* Total Income: Assessable income, plus reportable employer super contributions, plus reportable fringe benefits for the 20/21 financial year.

READ MORE ABOUT: HOW TO CONTRIBUTE TO YOUR SUPER

 

FIND AND CONSOLIDATE YOUR SUPER NOW

 

If you’re being paid by an employer  

If you’re a contractor who’s paid via your employer’s payroll, you should receive compulsory super payments from your employer. So it can be worth checking to see if you’re getting paid what you’re owed.

According to the ATO, if you’re a contractor paid mainly for your labour, then you might be considered an employee for superannuation purposes. That means you could be entitled to contributions paid into your super account by your employer. 

If you’re not sure, you can use the ATO’s employee/contractor decision tool to find out who should be paying your super. This is an important check so you don’t miss out on any owed super.             

 

The Superannuation Guarantee – if your employer is paying your super  

If you’re entitled to compulsory super payments from your employer, then you should know that the legal minimum payment is 9.5% of the value of your wage. This is called the Superannuation Guarantee, and the money must be paid into you’re nominated super fund. It’s your responsibility to let your employer know which fund this is.

You’re eligible for the Super Guarantee if you’re:

  • Classified as an employee (as opposed to a contractor)
  • 18 years old and over, and earn more than $450 before tax in a calendar month
  • Under 18 years old, earn more than $450 before tax in a calendar month, and you work more than 30 hours a week.

TELL YOUR EMPLOYER ABOUT YOUR SUPER

 

Quick checks to manage your super 

Working in the gig economy gives you flexibility – it can also be a way of supplementing your income, alongside another job. However, it can mean you’re juggling multiple employers, contracts or pay arrangements. Here are some quick checks to get your super in order.

1. Find all of your super 

The nature of gigging can mean multiple employers, which means many people end up with more than one super account. This can result in lost super and paying multiple admin and insurance fees.

You can check for multiple accounts and find any lost super you may have using the ATO online services through myGov. Alternatively, if you’re an AustralianSuper member – and give the Fund consent to use your Tax File Number (TFN) – we can help make sure you know where your super is.   

READ MORE: FIND LOST SUPER

 

2. Consolidate multiple super accounts 

If you do discover multiple accounts and lost super, consider consolidating your money into one account to avoid confusion in the future. This will make it easier to keep track of any future returns, as well as your balance.

Before making a decision to consolidate multiple funds, look out for any fees or charges that may apply for closing an account. Make sure you also understand the impact of consolidating your accounts on any additional benefits, such as insurance.

 

3. Know your insurance cover details

Admin fees are taken from your super, so not making payments can reduce your overall balance, which can affect your insurance. For example, in some circumstances, insurance cover linked to your super could lapse if there are no contributions made.

Working as a contractor or freelancer could affect the conditions that apply. The Insurance in your super guide contains terms and conditions about insurance, including costs, your eligibility for cover, how much you can apply for, when cover starts and stops and limitations or exclusions.

Different terms and conditions apply to our different divisions. If you don’t know which division you’re in, you can check by logging into your account and going to ‘My insurance’ then ‘Insurance options’, or check your member statement.

READ MORE: INSURANCE IN YOUR SUPER AUSTRALIANSUPER

 

AustralianSuper Members

To review your insurance cover and get some guidance, you can contact one of the AustralianSuper team and discuss your personal situation.       

READ MORE: INSURANCE – DEATH COVER, TPD & INCOME PROTECTION

 

4. Know your super balance

Your balance will be provided every year in your annual statement, but it’s a good idea to keep an eye on it throughout the year. AustralianSuper members can check how their super is performing by logging into your online account. Members can also download the app to monitor their balance and make on-the-spot contributions – an easy way to contribute on an ad-hoc basis.

If you’re responsible for your own super payments, consider setting up a simple direct bank transfer each month or quarter, to make sure you’re keeping your financial future secure.

MEMBERS: DOWNLOAD THE AUSTRALIANSUPER APP

 

If you’re an AustralianSuper member, you can also log in online and see your balance now.

 

Sources:
1. Inquiry into the Victorian On-Demand Workforce vic.gov.au
2. ATO – The self-employed
3. To claim a tax deduction for any concessional personal contributions, you’ll need to notify your super fund that you plan to claim a tax deduction before you lodge your income tax return. It's in your tax return that you’ll make the claim for a tax deduction for any concessional contributions to your super. Download more information on claiming a tax deduction (PDF)

This information may be general financial advice which doesn’t take into account your personal objectives, situation or needs.  Before making a decision about AustralianSuper, you should think about your financial requirements and refer to the relevant Product Disclosure Statement. AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898. 


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