Sole Trader Super & Retirement

As a sole trader nobody pays super for you — there is no Super Guarantee on your own income. That is a freedom and a trap: it is the one retirement contribution that is entirely on you, and the tax break for doing it is the same 15% deal employees get. Here is how to build real super from scratch, the catch-up rule that lets you make up lost years, and what "enough" actually looks like.‍‌‌‌‌‌‌‌‌‌‌‌‌‌‍

Nobody pays your super — so pay it like a wage

A sole trader or partner is not required to pay SG for themselves — your contributions are voluntary. The risk is obvious: years of swinging the hammer with nothing going in. The fix advisers push is to treat yourself like an employee — pick a percentage of your profit (even 10–12%, mirroring SG) and pay it into super as a routine, not an afterthought.

If you trade through a company or trust and pay yourself a wage, the picture flips: the entity is an employer and generally must pay SG for you as a director-employee (and for other workers who meet the tests — see Superannuation Guarantee). Draw only dividends or distributions with no salary and SG may not arise — but then nothing is building your super unless you contribute personally.

The main lever: personal deductible contributions

For most sole traders the workhorse is the personal deductible (concessional) contribution:

Contribute from business cash flow, lodge a notice of intent, get the fund's acknowledgment, and claim a deduction (the full process is in Super Caps & Salary Sacrifice).
It is taxed 15% in the fund instead of your marginal rate — strong arbitrage whenever you are above the 15% bracket.
It is flexible: no SG obligation forces it, so you can ramp it up in good years and pause in lean ones.
Watch the $30,000 concessional cap (2025–26) and that the money is locked until preservation age.

Catch-up: the carry-forward rule

Self-employment income is lumpy, so the carry-forward rule is made for tradies. If your total super balance was under $500,000 at the previous 30 June, you can use unused concessional cap from the previous 5 years on top of the current year's cap.

Example: you contributed $10,000 a year from 2020–21 to 2024–25 — $20,000 of unused cap each year, $100,000 in total. If your balance was under $500,000 at 30 June 2025, in 2025–26 you can put in the $30,000 standard cap plus up to $100,000 carried forward = up to $130,000 as a deductible contribution (cash flow and taxable income permitting). The ATO shows your available carry-forward amount in myGov — check it before a big catch-up, e.g. in a year you sell a lot of plant or have a bumper profit.

Where to hold it: industry/retail fund vs SMSF

Two broad homes, and which suits you is about balance and appetite for admin, not a "best fund":

Industry or retail fund — the usual starting point: diversified options, in-fund life/TPD and income-protection insurance, online access, compliance handled for you. Low hassle; fees are a mix of percentage and flat admin.
SMSF (self-managed super fund) — you run your own fund and choose specific assets (including, within strict rules, business premises). It gives control but carries fixed annual costs (admin, accounting, audit, ATO fees — typically several thousand dollars a year), so it is generally only cost-effective at higher balances (often cited around $300,000–$500,000+), and you take on trustee duties and real compliance risk (loans to members, in-house asset limits).

We do not recommend specific funds or structures — which option fits depends on your balance, goals and circumstances. Get licensed financial advice before setting up an SMSF.

You can also top up beyond the concessional cap with after-tax (non-concessional) contributions — $120,000 a year, or up to about $360,000 over 3 years under bring-forward — more common near retirement or after selling a business or property.

What "enough" looks like

The ASFA Retirement Standard (figures around 2025, updated regularly) gives a yardstick for a home-owning retiree:

"Comfortable" annual spend: roughly $48,000–$53,000 for a single, $73,000–$75,000 for a couple.
Super target: about $595,000 (single) or $690,000 (couple) — assuming you draw on super plus a part Age Pension, own your home, and retire around age 67.

These are benchmarks, not rules. The Age Pension (pension age 67) is means-tested on both income and assets, and your super counts as an asset once you are of pension age and drawing it — so for many tradies the realistic plan is super income topped up by a part Age Pension. The practical move: use the concessional caps and catch-up hard in your higher-earning 40s and 50s.