Sole traders face super access challenges

Ending a contract with a customer (even a big one) may not be enough for a sole trader to qualify as ‘retired’ for super purposes.

Why it matters: to meet the “retirement” condition of release, one must cease gainful employment.  A sole trader working full time may need to wait until 65 to access their super.  

 Let’s take a closer look at the detail: To “retire” for super purposes, one can stop a gainful employment arrangement after 60.  A 62-year old employee who quits their job can access their super – even if they take another job.  But sole traders may need to do more than end a contract; they may need to stop trading or sell their business. 

 Can a sole trader “retire” while still trading?  Maybe.  Remember there’s two definitions of retirement. 

 An individual who’s at least preservation age (usually 60) can also “retire” for super purposes if: 

• they’ve already left a paid job before (doesn’t matter when), and 

• satisfy the fund trustee they never intend to again become gainfully employed for 10 or more hours per week in future. 

A sole trader with a past termination may access super without stopping their business.  But they must genuinely intend to retire, work under 10 hours a week and have no plan to exceed that in the future.   

 The same rule applies to employees reducing their hours with their current employer.  

At Heffron we get lots of questions about whether individuals are eligible to access super. We’ve covered sole traders, but what about resigning as a director or if an individual has only been paid with super contributions? We cover this and more in our Specialist course on benefits.  To enrol, click here.