The Superannuation Guarantee (SG)
Most employers should be paying at least 9.5% of an employee’s earnings towards their super. Making these payments on time means you can claim them as a tax deduction.
Do I have to pay super?
If you pay an employee more than $450 a month you’re almost always legally required to make super contributions on top of their wages. You can find out more about the Superannuation Guarantee by visiting the Australian Tax Office (ATO) online.
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What happens if you miss the quarterly deadline and make a late payment?
The minimum you need to pay is currently 9.5% of an employee’s ordinary time earnings.
Ordinary Time Earnings
For employees with straightforward terms and conditions of employment, working out ordinary time earnings should be simple. It’s worth understanding what sort of payments (like allowances and commissions) count as ordinary time earnings.
You’ll also need to know if your employees are covered by an award or agreement that means you need to pay a higher super contribution. Fair Work Australia can help you work out if you need to be paying a higher amount.
Maximum contributions
There’s a limit to the amount of super that you have to pay for an individual employee. This is known as the maximum contributions base.
For the 2017/2018 year the maximum contributions base is 9.5% of a person’s salary up to a maximum salary of $52,760 per quarter ($211,040 a year). If an employee’s salary exceeds this maximum, you don’t need to increase their super payments to match it – unless required by an award or agreement.
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What is the Super Guarantee Charge (SGC)
If your employees receive government entitlements or have income reporting obligations, these entitlements may be affected by employer super contributions. That’s why the Government requires you to list different types of super contributions when you lodge your payment summary.
- Salary sacrifice contributions your employee has asked you to make from their before-tax pay.
- Additional amounts paid to an employee's super fund (for example, an annual bonus paid to super).
- An employee negotiating for increased super contributions as a part of their salary package (for example, under individual employment contracts).
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What happens if I don’t pay super for eligible employees?
Payments made on time (before the Australian Taxation Office SG contributions’ deadlines) can be claimed as a tax deduction. If you don’t meet the quarterly deadline you’ll have to provide a statement the following month to the ATO and pay the Super Guarantee Charge.
Period SG tax deductibility deadline SG statement lodgement and SG charge payment deadline
1 Jul-30 Sep 28 Oct 28 Nov 1 Oct-31 Dec 28 Jan 28 Feb 1 Jan-31 Mar 28 April 28 May 1 April-30 Jun 28 Jul 28 Aug If a member is making contributions as a payroll deduction from their after-tax salary, these must be paid to their super fund within 28 days of the end of the month.
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What if my circumstances change and I don’t need to pay super?
With many Australians contracting rather than working as ‘traditional’ permanent employees, it’s important for employers to understand the rules around super for contractors.
Do contractors get super?
If you contract someone to work for your business, and they’re considered an employee for super purposes, you’ll need to pay the minimum 9.5% super based on a worker’s ordinary time earnings (OTE), even if they have their own ABN.
This includes contractors who are paid:
- under a verbal or written contract that is wholly or principally for their labour – that is, more than half the dollar value of the contract is for their labour
- for their personal labour and skills – which may include physical labour, mental effort or artistic effort – and not to achieve a result
- to perform the contract work personally – that is, they must not delegate.
If your contract is with someone that doesn’t actually provide the labour - such as a company, trust or partnership - you don’t pay super to that person.
The Australian Taxation Office (ATO) website has more information on paying super for contractors including tools to help you work out if a contractor is considered an employee for super purposes, if they’re eligible for super, and how much super you need to pay them.
*QuickSuper is a registered trademark and a product owned and operated by Westpac Banking Corporation ABN 33 007 457 141. Westpac’s terms and conditions applicable to the QuickSuper service are available after your eligibility for the free clearing house service is assessed by AustralianSuper. A Product Disclosure Statement (PDS) is available from Westpac upon request.
Making AustralianSuper your default fund
Generally, employees can nominate their preferred super fund using a Standard Choice form, but not all do. In those cases, you need have a default fund set up so that you can pay their super into an account.
Giving your employees our pre-filled Standard Choice form makes this process quicker and easier. You can download this form below.
Joining or switching to AustralianSuper
Our Product Disclosure Statement has all the information your employees need if they join or switch to AustralianSuper. If your employee joins AustralianSuper online, they just need to provide you with their member number.
Download a copy of our Product Disclosure Statement here, or contact us to order hard copies for your office. The PDS includes a standard Join Form.Passing on important employee information
When an employee starts work with your company, they should complete an ATO form that contains their TFN. Once they’ve given you this form, you must pass on their TFN to us:
- within 14 days of the employee giving you this form, or
- when you make the first SG contribution on their behalf
The ATO may fine you $1,100 if you’re late providing an employee’s TFN. Privacy laws don’t allow you to give us a copy of the ATO’s form, but they do allow you to pass their TFN onto your employee’s super fund.
