Are you meeting your obligations? Super for contractors & Director responsibilities explained

Running a business in today’s climate means staying on top of ever-changing compliance requirements. In this blog, we’re covering three big topics every business owner needs to know about: paying super for contractors, understanding Director Penalty Notices, and protecting yourself from ATO impersonation scams.

Do you need to pay super for contractors?

Engaging independent contractors is common for small businesses — whether it’s a graphic designer, a tradie, or someone to help with admin support. But here’s a surprise for many owners: in some situations, you may still be required to pay superannuation guarantee (SG) for your contractors.

Even if the contractor has an ABN and issues invoices, your business could still have super obligations.

When does super apply?

Super generally applies if:

• The contract is mainly for the individual’s personal labour (not equipment or materials).

• They’re paid based on time worked, such as an hourly rate.

• They must perform the work themselves and can’t delegate it to others.

For example, if you hire a freelance admin assistant for 10 hours a week and pay them hourly, super would likely apply. On the other hand, if you engage someone to build a website on a fixed quote basis, super may not be required.

If you contract with a company or trust, superannuation guarantee (SG) doesn’t apply. But if you engage the individual directly, the rules are different.

Risks of getting it wrong

Failing to pay super when it’s required can result in:

• The Super Guarantee Charge (SGC)

• Interest and penalties

• In severe cases, personal liability for company directors

This is a complex area, so don’t try to guess. A bookkeeper can help you determine whether super applies, set up correct processes in your accounting software, and refer you to tax or legal specialists if needed.

Director Penalty Notices: What you need to know

If you’re a company director, you hold significant responsibility. One of the most serious risks you face is receiving a Director Penalty Notice (DPN) from the ATO.

What Is a DPN?

A DPN makes directors personally liable for unpaid company tax obligations, including:

• Pay As You Go (PAYG) withholding

• Superannuation Guarantee Charge (SGC)

• Goods and Services Tax (GST)

Even if your company is wound up or stops trading, directors can still be held accountable.

Types of DPNs

1. Non-Lockdown DPN (21-day notice): Issued when returns are lodged on time but payments are missed. Directors have 21 days to act — by paying, negotiating a payment plan, or placing the company into administration or liquidation.

2. Lockdown DPN: Issued when BAS or super returns are not lodged on time. Here, liability is automatic, and the only way to resolve it is by paying in full.

Why it matters now

The ATO has increased debt recovery efforts, including for debts that arose during or before COVID. Businesses with long-standing tax debts are increasingly receiving DPNs.

What to do if you receive one

• Act immediately — ignoring a DPN isn’t an option.

• Speak to your bookkeeper or accountant.

• Seek advice from a tax or insolvency professional.

• Ensure all future returns are lodged on time, even if full payment isn’t possible.

Tip: Staying compliant is your best protection. Lodge on time, monitor ATO accounts, and address cash flow challenges early.

Scam Alert: ATO Impersonation

ATO impersonation scams have surged, with reports up by more than 300% compared to last year. These scams target busy business owners through fake emails and texts designed to steal sensitive information.

If scammers gain access to your details, they can commit fraud in your name — putting your finances and reputation at risk.

How to stay safe

• Stop: Never share your MyGovID or ATO login details. Only provide sensitive information, like your TFN, when it’s absolutely necessary.

• Check: Don’t click on unexpected links or QR codes, even if the message looks genuine.

• Protect: If something feels suspicious, act fast and report it.

Remember: The ATO will never send a message asking you to log in or provide information via a link.

Your bookkeeper can also help identify and report suspicious activity.

Key Dates to Remember

• 21 September – August monthly Activity Statements due

• 21 October – September monthly Activity Statements due

• 28 October – Superannuation Guarantee contributions for July–September due (received by super funds)

• 28 October – Quarterly BAS for July–September due

• 31 October – Individual 2024/25 income tax returns due if not using a tax agent

Final thoughts

Whether it’s staying compliant with superannuation, protecting yourself as a director, or keeping safe from scams, awareness and timely action are key. By working closely with your bookkeeper and staying proactive, you can protect your business — and yourself — from costly mistakes.

If you'd like assistance, please reach out! We'd love to have a chat with you.

Credit: Australian Bookkeepers Network Pty Ltd