Sole traders rein in super contributions

Yasmine Raso

Senior Journalist, Financial Newswire

21 October 2022

A new survey from Australasian accounting fintech for self-employed individuals, Hnry, has found one quarter of independent earners plan to cut back on planned superannuation contributions due to rising costs of living.

Surveying 500 Australian sole traders, the Hnry Sole Trader Pulse revealed 43 per cent had never made a super contribution and women (31 per cent) were more likely to cut back on payments than men (20 per cent).

This comes as economic conditions continue to worsen, forcing sole traders to work additional hours, cut rates to land contracts and save on costs to overcome inflationary pressure. The survey found this has taken a toll on the mental health and wellbeing of sole traders, with fewer respondents saying they have the right work-life balance now compared to 12 months ago.

“Sole traders have started to see the hard-won financial gains that were crucial lifeline post COVID start to plateau this quarter,” Karan Anand, Hnry Australia Managing Director, said.

“With increasing inflationary and interest rate pressure, uncertainty in the economic outlook and financial admin taking them out of action for a full day every week or forcing them to find these hours last at night, it is no surprise that almost half of the self-employed – and vastly more women than men – are not contributing to their super.

“These pressures are compounded by the data that shows that just three weeks out from the tax filing deadline, only 50 per cent have completed their tax returns.”

Sole traders, of which there are 1.5 million in Australia, make up close to three quarters of the nation’s small businesses and earn a combined estimate of around $90 billion a year. The survey found they are “drowning in paperwork”, spending one working day a week having to manage their financial and tax matters.

“That’s why Hnry plays such an important role in the lives of sole traders,” Anand said.

“They are the engine room of the economy, dynamic and diverse. Hnry saves them time, money and hassle so they can focus on their businesses and their lives: we make it easy for them to manage their finances by automatically paying their taxes for them on time and in full and streamlining their super.

“Most Australians are facing tougher economic time at the moment, and we really admire how the self-employed are pushing through. We are here to support them.”