Australia’s sole traders have been warned they are mortgaging their futures as they cut back on superannuation contributions in the face of the soaring cost of living.

According to the Hnry Sole Trader Pulse, the only nationwide survey of self-employed people in Australia, around a quarter of independent earners (24%) plan to cancel or delay planned super contributions to cope with skyrocketing costs and surging inflation.

And it said women were more likely than men to cut back on super – 31% versus 20%.

The figures are especially stark given that superannuation is not compulsory for sole traders, the 1.5M individuals with an ABN who make up around three quarters of the nation’s small businesses. A full 43% said they had never made a superannuation contribution as sole traders. 

Despite this, the number of sole traders is currently growing at a rate of 50, 000 a year because they value the freedom and flexibility that independent earning can bring.

The survey also found:

As the survey marks 12 months, it provides a compelling snapshot of the sentiment of self-employed people in Australia, such as tradies, freelancers, and consultants – the fastest growing sector of the economy. 

The research was carried out by Resolve Strategic between 4-10 October on behalf of award-winning fintech Hnry, Australasia’s largest and fastest-growing digital accountancy service which caters expressly to sole traders.

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

“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.

“We also know that, overwhelmingly, sole traders consciously choose working for themselves because of the myriad positive benefits it brings: lifestyle, flexible working conditions, a chance to pursue their passion and choose their own future. 

“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.”

The Hnry Sole Trader Pulse is Australia’s only regular, comprehensive regular snapshot of self-employed people in Australia, such as tradies, freelancers, and consultants.

Some 1.5 million Australians classify their primary occupation as “self-employed;, with total estimated earnings of around $90 billion a year. 

Hnry – which streamlines tax, accounting and invoicing for sole traders by paying and filing taxes as a person receives income, with taxes are paid automatically and in real time - recently won the People’s Choice Award at the 2022 FinTech Australia Finnie Awards.

Photo: Irina/Unsplash