Do I Have to Pay Super for My Subbies? How Perth Builders Tell a Contractor From an Employee

Quick answer

If you pay a subbie mainly for their labour, you must pay super for them. ABN or not.
That's 12% of the labour part of their pay, landing in their fund within 7 business days of paying them (Payday Super, from 1 July 2026).
If you pay a company, trust or partnership, or pay for a finished result, you generally don't.

The 3-question super test

For super, the ATO treats a contractor as your employee if the contract is mainly for their labour. Answer three questions:

Is more than half the price for their labour? Not materials, equipment or GST.
Are you paying for their time and skills, rather than a finished result?
Do they have to do the work themselves? If they can't send someone else in their place, that's a yes.

Three yeses means you pay super. Their ABN doesn't change the answer. And remember the ATO already knows who you paid and how much, because you told it in your TPAR.

How it plays out on a Perth site

Arrangement	Super from you?
Labourer on an hourly rate with an ABN, working your hours	Yes
Sole trader chippy on a day rate who has to turn up himself	Yes
Sole trader tiler, fixed price per bathroom, supplies materials and can send his offsider	Usually no
Plumber on a quoted job who fixes his own defects at his own cost	Usually no
Sparky invoicing through his own Pty Ltd	No

Is my subbie actually an employee?

That's a bigger question, because employees also get award wages, leave, PAYG withholding and workers comp. Here's the warning for WA: the leading High Court case, Personnel Contracting (2022), was about a labourer on Perth building sites. He had an ABN and a contractor agreement. The court still found he was an employee.

Courts start with the written contract. But since 26 August 2024, the Fair Work Act also looks at how the job really runs day to day. A good-looking contract won't save an arrangement that works like a job.

Red flags

Paid by the hour or day, not by the job
You set the hours and supply the tools and materials
They can't sub the work out or send someone else
They work only for you, long term, in your gear
You fix their defects at your cost

Two or three of these and you're probably looking at an employee.

The WA catch: one subbie, four different tests

Each scheme uses its own rules, so a subbie can be fine for one and caught by another:

Workers comp (WorkCover WA): a contractor can count as a "worker" you must insure. An ABN doesn't change that.
MyLeave: individual subbies hired mainly for labour and paid by the day or hour must be registered, with the levy paid every three months.
WA payroll tax: once your wages pass $1 million, some contractor payments can be added in.
PAYG withholding: applies if they're an employee.

What getting it wrong costs

Super guarantee charge: the unpaid super, plus interest compounding daily, plus an administrative uplift that starts at 60%. The charge is now tax deductible for earnings from 1 July 2026, but it's still far more than paying on time.
Directors pay personally: unpaid super can land on you through a director penalty notice.
Sham contracting: Fair Work penalties, unless you can show you reasonably believed the arrangement was a genuine contract.
Back pay: award rates, leave and super, sometimes for years.

Our view

Here's what we tell every Perth builder we work with: if a subbie is paid for their time, treat them as staff for super from day one and build the 12% into your rates. Paying it costs 12%. Getting caught costs the 12%, the interest, the uplift and possibly your own money through a director penalty notice. Clean contracts protect you on the rest.

What to do this week

List every subbie you paid in the last 12 months. Your TPAR is a good starting point.
Run each one through the 3 questions above.
For labour-only subbies, get their super fund details and add them to your pay run.
Put proper contracts in place for the rest: fixed price, own tools, right to send someone else, and make sure the job really runs that way.
Check your MyLeave registration and your workers comp policy.
If you've missed super, talk to us before the ATO talks to you.

Frequently asked questions

Do I have to pay super for a subcontractor with an ABN?

Yes, if you pay them mainly for their own labour. Having an ABN makes no difference to the super test.

How much super do I pay for a subbie?

12% of the labour part of what you pay them, not materials, equipment or GST. Under Payday Super it must reach their fund within 7 business days of paying them.

Do I pay super if my subbie works through a Pty Ltd?

No. If you pay a company, trust or partnership, you have no super obligation for the people it employs. That is the entity's job.

Is a subbie an employee if they only work for me?

Not automatically, but it is a red flag. Combined with an hourly rate, your hours and your tools, it points strongly towards employment.

What if I have been getting it wrong?

Tell the ATO before it contacts you. Owning up first can cut the administrative uplift, which starts at 60% of the shortfall. Then fix your contracts and payroll.

About the author

Colm Delaney, CA is a Chartered Accountant (CA ANZ) and founder of Reacco Chartered Accountants in Warwick, Perth. Reacco works exclusively with construction, trades and property businesses in Western Australia.

General information only: this article is not personal tax, legal or financial advice. It is correct as at 10 October 2026. Whether a worker is an employee depends on the full facts and the actual contract. Speak to a registered tax agent or employment lawyer about your own arrangements.