1 July 2024
If you own or manage a business and employ people, you are required to pay your eligible employees super. The rules are set out under the superannuation guarantee (SG) legislation, a law that tells you the minimum amount you need to pay, to which workers, and how often.
Find out the basics below and see how AustralianSuper can help you manage your employee super payments to help them save for their future.
Who to pay super to
All employees are generally covered by the super guarantee. It applies to full-time, part-time, and casual workers.
Employees that are eligible for super:
| Eligible | Not eligible |
|---|---|
|
|
More information on super eligibility is available at ato.gov.au
Pay your contractors super
In most cases, if your business pays a contractor for their labour, the government will consider them to be an employee for super purposes. That means you’ll need to pay them SG, even if they have their own Australian Business Number (ABN).
If your contract is with someone who doesn’t provide the labour (such as a company, trust or partnership), you don’t need to pay super to that person.
If you’re unsure, the ATO has more information on super eligibility and paying contractors super.
How much super to pay
The super guarantee (SG) is the mandatory contribution employers must make on behalf of their eligible employees. The SG rate is a percentage of an employee’s ordinary time earnings (OTE). This rate will increase to 12% on 1 July 2025.
Some employees may have a higher percentage of super agreed by an award rate or EBA. If this is the case, you’ll need to pay the higher amount. (For more information about award rates visit Fair Work Commission).
To work out how much super to pay your employees and understand what is considered OTE and overtime, the ATO has additional resources including a SG contributions calculator.
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Maximum SG payment caps
If you have employees on a large salary, you might want to familiarise yourself with the Maximum super contribution base. This rule puts a limit on the amount of SG an employer can pay an individual employee in a single quarter or financial year. Anything earned above that limit doesn’t have to have super paid.
For employees whose OTE is higher than the maximum super contribution base, you may still pay super based on the SG rate of OTE, if required to under an award or agreement.
However, the extra contributions aren't compulsory, and you should keep in mind the concessional contribution limits.
When to pay your employees super
You must pay your employees super at least once a quarter by the due dates shown in the table below. You can choose whether this is one payment, or whether you pay monthly or fortnightly. The frequency may also depend on whether any employees are under an award or employment agreement that sets out a specific payment frequency.
Employee super contribution due dates| Quarter | Period | Payment due date |
|---|---|---|
| 1 | 1 July–30 September | 28 October |
| 2 | 1 October–31 December | 28 January |
| 3 | 1 January–31 March | 28 April |
| 4 | 1 April–30 June | 28 July |
Source: ato.gov.au
Making super payments on time isn’t just important for your employees, it’s important for your business. Employers who make SG contributions in line with the ATO’s deadlines can claim the payments as a tax deduction and will avoid paying a super guarantee charge (SGC) to the ATO.
What happens when you miss a payment
If you miss a SG payment deadline, you’ll have to lodge a super guarantee charge (SGC) statement within one month after the quarterly SG due date. You’ll also have to pay the SGC to the ATO, which is not tax-deductible, and is made up of:
- The unpaid SG payments
- Interest on the outstanding amount, and
- An administration fee.
You can download the SGC statement and work out how much you need to pay for each employee using the ATO SGC statement and calculator tool. It’s important to note, further penalties will also apply if you don’t lodge the SGC statement and pay the SGC by the due date.
Pay day super is coming
On 1 July 2026, the Government's new pay day super legislation will come into force. This will require employers to pay their employees' super on pay day instead of every quarter.
As part of the 2024/25 Federal Budget, the Government committed a portion of its $60 million Productivity, Education and Training Fund to further support this measure, first announced in the 2023/24 Federal Budget.
“By switching to payday super, a 25-year-old median income earner currently receiving their super quarterly and wages fortnightly could be around $6,000 or 1.5 per cent better off at retirement.
More frequent super payments will make employers’ payroll management smoother with fewer liabilities building up on their books.”1.
Stay up-to-date with us on the latest legislative developments affecting super.
Three important things to keep in mind:
1. Offer eligible employees a choice of super fund:
Most employees have the right to choose their own super fund. Employers should provide a ‘standard choice form’ to new employees within 28 days of their start date.
If an employee doesn’t choose a preferred fund, as an employer, you may need to request their stapled fund details from the ATO. To make sure you can pay super to all employees, your business should nominate what’s called a ‘default fund’ which you can use if the employee doesn’t make a choice or have a stapled fund.
Choosing a default fund is an important decision. It helps to look for a fund that works for both you and your employees.
DISCOVER SUPER FOR YOUR BUSINESS
2. Provide your employee’s Tax File Number (TFNs) to their super fund:
For new employees, you must provide their TFN to their super fund at least 14 days before you make their first contribution. For existing employees, you have 14 days from when you receive it to give their TFN to their super fund.
There is no need for you to provide AustralianSuper the employee’s completed Tax File Number Declaration form. Simply providing the employee TFN is sufficient.
3. Report extra super payments to the ATO
If you pay your employees additional super contributions, for example from a bonus or via salary sacrificing, you need to report the payments to the ATO. These extra contributions could influence any government payments your employees may receive. For example, family tax benefits, child support payments and government co-contributions. To identify other reportable employer super contributions, read more on ato.com.au.
You can do this by reporting any extra super paid through Single Touch Payroll or as an item on your employee’s PAYG Payment Summary and Payment Summary annual report to the ATO.
Using a compliant payment system
Ensuring that eligible employees are paid the correct super amount, at least quarterly aren’t the only things you need to do to meet your employer obligations. All super payments must be made through an online system that meets SuperStream requirements.
One way to meet these requirements is to pay super through a compliant ‘clearing house’. At AustralianSuper we use QuickSuper2 although there are other options such as compliant payroll software of the ATO’s Small Business Clearing House .
References
- Treasury, 2023, Consulting on payday super, ministers.treasury.gov.au, accessed on 8 December 2023
- QuickSuper is a financial service provided by Westpac. AustralianSuper doesn’t accept liability for any loss or damage caused by use of the QuickSuper service and doesn’t receive any commissions from Westpac if employers use this service. Terms and conditions apply. Visit https://quicksuper.westpac.com.au to learn more