My subcontractor has an ABN and sends me an invoice — do I have to pay him super, and on how much of it?

You have used the same tiler, cleaner or driver for years. He has an ABN, he sends you an invoice at the end of the month, and both of you have always assumed super is his own business, not yours. On 2 September 2026 the ATO refreshed its guidance on exactly that arrangement — and the part it rewrote is not whether you have to pay, but what you have to pay it on.

The ABN is not the answer

The ATO's position on this has not moved: if you pay an independent contractor mainly for their labour, they are an employee for superannuation guarantee purposes. It does not matter that they have an ABN, that they invoice you, or that your written agreement calls them a contractor. Those things describe the paperwork, not the substance of what you are buying.

Three things decide it. More than half the dollar value of the contract has to be for their labour. You have to be paying for their personal labour and skills, rather than for a specified result. And the work cannot be delegated to someone else — they have to do it themselves.

There is a clean line on the other side. If your contract is with a company, a trust or a partnership, you do not pay super for the person that entity sends to do the work. The ATO's own example is a shop that engages a painting business to paint the shop: the shop paid for a result, so it has no super obligation for the painter — and that stays true even where the painting business is a sole trader who does the job himself, because he was engaged to achieve a result.

What actually changed on 2 September

Until this month, the instruction on how to value the labour component of a contractor's invoice sat in a determination issued in 1996, SGD 96/2. It was withdrawn with effect from 2 September 2026 — not because the ATO changed its mind, but because from 1 July 2026 the Treasury Laws Amendment (Payday Superannuation) Act 2025 replaced 'salary or wages' with a new base called 'qualifying earnings'. The old determination was written for a concept that no longer drives the calculation.

In its place the Commissioner issued draft determination SGD 2026/D1 on the same day. It is a draft: comments close on 2 October 2026, and when it is finalised it is proposed to apply to payments of qualifying earnings made on or after 1 July 2026 — that is, back to the start of the current financial year. The ATO's public page on super for independent contractors was updated on 2 September as well, so the plain-language guidance and the technical draft now say the same thing.

What comes out of the invoice before you work out the super

Only the amounts that reward the person's own effort count. The draft lists what does not: hire of plant or machinery, the cost of materials used in the work, reimbursements that compensate the worker exactly for an expense incurred on your behalf, third-party costs on-charged to you, expenses the worker paid as your agent, and the part of the price that is GST.

What does count is broader than many employers expect. Because this limb of qualifying earnings sits separately from ordinary time earnings, it is not limited to ordinary hours — overtime paid under the contract is in, and so is an on-call allowance, even where it is paid for hours the person would not otherwise have worked.

The draft works one through. A labourer is engaged for a month at $26 an hour including GST, plus a flat $800 including GST for the hire of his own forklift. He invoices $4,700 for the month, itemised as $3,900 of labour and $800 of forklift hire. Take out the $800, then take out the $354.55 of GST sitting inside the labour figure, and super is worked out on $3,545.45 — not on the $4,700 that left your bank account.

That example works because the invoice was itemised. Where it is not, the draft allows you to use a reasonable market value of the labour component — industry award rates are the example the ATO gives — or a reasonable market value of the non-labour part, and back into the labour figure from there. Either way, section 79 of the Act requires you to keep records showing how you arrived at the split and why it is a reasonably accurate estimate. A number with no working behind it is the thing that does not survive a review.

The two mistakes that cost the most

The first is paying the money to the worker instead of the fund. It is a common arrangement — an extra amount equal to the super percentage added on top of the usual rate, with the worker to sort it out himself. The ATO is explicit that this does not count as a super contribution, and it does not reduce the super guarantee charge by a cent. The contribution has to go to a fund. If a contractor is an employee for super purposes, they can generally choose that fund, and you have 28 days from their start date to offer them the choice; if they do not choose, you request their stapled fund from the ATO.

The second is timing. There is no special deadline for contractors under payday super. Where you pay by invoice, the payday is the date you pay the invoice, and the contribution has to reach the fund within seven business days of that date — not leave your account within seven days, reach the fund. For a business that pays subcontractors in a monthly batch, that turns super into a task that follows every payment run.

This is general information current as at September 2026, not advice for your situation — whether a particular worker is an employee for super purposes depends on the terms you actually engage them on, and SGD 2026/D1 is still a draft that could change before it is finalised.

The practical step is small and worth doing this month: pull the last few months of contractor invoices and see how many are a single unsplit line. Those are the ones where you have no defensible labour figure, and they are also the easiest to fix — ask for the labour, materials and equipment to be itemised from the next invoice on. If you engage subcontractors regularly and are not sure which of them the extended definition reaches, that is what our companies, trusts and bookkeeping service is for.