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Overview
If you need to pay super for contractors, it's easy to do in Easy Business App.
As per the ATO article on super for contractors:
If you pay independent contractors mainly for their labour, they are employees for superannuation guarantee (SG) purposes. You may need to pay super to a fund for them.
The usual rules around Payday Super apply, too. The day you pay a contractor's invoice is considered to be like the "pay day" for Payday Super, so you have seven working days from the day after the payment for any eligible super contributions to arrive at their fund.
Not sure if you should be paying super for your contractors or sub-contractors? Check with your bookkeeper or accountant!
In Easy Business App we handle this process via Supplier records (not via Employee records). Follow the simple instructions below to see how easy it is.
How to Pay Super for Contractors
Whenever you have a contractor you need to pay super for:
- Create a Supplier record (in the Bills module, Suppliers screen) and enter the name, contact details, address and ABN; then navigate to the Supplier tab.
- Click the toggle to Pay Super for this Contractor
- Enter their Birth Date and Fund Details (you can pay to either an APRA fund or an SMSF).
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Save the record and then navigate to the Easy Payslip > Super screen.
- Click the Add Contractor Payment button at the top of the screen.
- Select the Contractor from the drop-down list (note: only Suppliers that have the Pay Super for this Contractor toggle enabled will show here).
- Enter the Bill Payment Date (this should be the date you paid their invoice) — this is the date that is used as "pay day" (i.e. "Qualifying Earnings Day") for Payday Super. Super payments will be due to the fund 7 working days from the day after this date.
- Enter the Amount of super to be paid. Remember, you need to pay super only for the labour portion of the invoice (i.e. you should exclude any payments for material/equipment, overtime or GST), generally at the prevailing super rate (12%) - see this ATO page for more details.
- Click Add Payment
- The payment amount will now appear in the To Pay tab. In the example below we can see one contractor payment (the top line) and an employee payslip (the second line).
(If you need to edit or delete the amount, click the pencil icon)
- Click the checkbox next to your contractor(s) payments and click Pay Super. You'll then make a payment via our clearing house partner, Beam, just like for regular employees.
Frequently Asked Questions about Contractor Super Payments
Q: What if I've made a mistake? Can I delete the payment from "To Pay"?
A: Yes. Just click the pencil icon and then press Delete.
Q: Can I do a Member Verification Request (MVR) to confirm the super fund details for the contractor before I pay them the first time?
A: Yes! The process works just the same as for employees. Learn more in our guide to Member Verification Requests (MVR) in Easy Business App.
Q: Do I set up a contractor as an Employee in payroll?
A: No. You do not need to set up your contractors as Employees in the payroll module. Although this is common in other systems, we decided not to do this as there are many, many irrelevant fields and it messes up the payroll module with dummy payslips, un-lodgeable STP etc...
Q: Is contractor super included in existing Easy Payslip plans?
A: Yes! It's included at no additional cost, however, each contractor you pay super for in a calendar month counts towards your employee count for your plan.
Example
ABC Construction Pty Ltd has 3 employees they pay fortnightly. They are on the Easy Payslip 1-4 employees plan. They start working with two contractors who are considered employees for superannuation purposes. ABC Construction now need to pay 3 employees + 2 contractors, which means they upgrade their Easy Payslip subscription to the 1-6 plan.
Note that Easy Payslip offers an ultra-affordable unlimited employees payroll plan, so even if you need to pay super for for lots of contractors it's a great option.