A guide to understanding Superannuation Guarantee rules and regulations. Learn about the super related responsibilities regarding your employees and the implications of need meeting your obligations.
Superannuation Guarantee (SG)
Superannuation Guarantee (SG) legislation requires most employers pay a minimum of 11% of an eligible employee's ordinary time earnings (OTE) as super. If paid on time, an employer can claim these payments as a tax deduction.
The minimum monthly income threshold to determine eligibility for Super Guarantee (SG) has been removed as of 1 July 2022. This means, all eligible employees will receive SG from their employer regardless of how much they earn, provided the necessary eligibility requirements are met.
Until 30 June 2022, an employee who had monthly ordinary times earnings of up to $450 was not eligible for SG.
Choice of fund and stapling
Most employees are entitled to choose the super fund their employers pay their super contributions into.
If the employee has the right to choose their own super fund, you must supply a Standard Choice Form within 28 days of their start date. This form allows them to nominate the super fund they want their super to go to and provides you with the information you need to make contributions.
If your employee has choice of fund, but does not make a choice, you need to choose a fund on their behalf. This is called your default fund.
From 1 November 2021, if you hire a new employee who has an existing stapled super fund and doesn’t make a choice of fund, you may need to make contributions into the stapled fund. A stapled super fund is an existing super account which follows an employee or is linked or “stapled” to the employee when they change jobs. You may need to request an employee’s stapled super fund from the ATO. Learn more about stapling on the ATO website.
If an employee does not have choice (for example, under an enterprise agreement or workplace determination made before 1 January 2021), contributions must be paid to the super fund specified in the applicable industrial award or enterprise agreement.
An employee is generally eligible to choose their super fund if they are:
- employed under a federal award;
- employed under a Notional Agreement Preserving State Award (NAPSA);
- employed under an award or industrial agreement that does not require super contributions;
- employed under an enterprise agreement or workplace determination made on or after 1 January 2021; or
- not employed under any state award or industrial agreement (including contractors who are regarded as eligible employees for super purposes).
You cannot provide recommendations or advice about super to your employees, unless you are licensed by the Australian Securities and Investment Commission to provide financial advice.
If you're not sure what award or agreement covers your employee, or whether your employee has the right to choose their own super fund, visit fairwork.gov.au or the ATO website for further information.
Calculating Superannuation Guarantee payments
To calculate how much SG is owed to an employee, you will need to know their Ordinary Time Earnings. This is simpler for employees with straightforward terms of employment. For complex salary packages (like loadings, allowances or commissions) it can be more difficult to calculate.
This guide from the Australian Taxation Office (ATO) might help.
SG and leave
Employers must pay SG contributions for eligible employees who are at work or on leave, including:
- Annual leave;
- Paid sick leave;
- Long service leave; and
- in some circumstances workers’ compensation.
SG contributions are usually not required when an employee is away from work and not receiving pay, such as parental leave or other approved leave without pay. However, an award or agreement may stipulate otherwise.
Limits on how much super you pay - Maximum Superannuation Contributions Base
There’s a limit to the amount of SG you must pay for any individual employee.
The maximum superannuation contribution base (MSCB) is used to determine the maximum SG contributions an employer is required to make under super laws. The MSCB is assessed quarterly. It is indexed and changes each financial year.
For employees whose OTE is above the maximum contributions base, you may still contribute, but unless required under an award or agreement, the extra contributions aren’t compulsory.
Tax File Numbers (TFNs)
To begin work with a company, an employee is generally required complete a TFN declaration.
Once your employee provides you with their TFN, you are obliged to give this information to their chosen super fund. This must be provided:
- Within 14 days of the employee giving you their TFN; or
- When you make their first SG contribution.
There are penalties for employers who are late, or do not pass an employee's TFN to their fund. This can also have negative financial consequences for an employee. You can’t make a copy of their TFN declaration to send to a super fund, but if you are registered with legalsuper as an employer, you can provide an employee’s TFN online by logging into EmployerAccess below.
How often is SG payable, and when is it due?
Payments made on time can be claimed as a tax deduction, and late payments can have penalties. SG contributions are due at least quarterly (every three months), though you can make payments at other frequencies such as monthly. The quarterly deadlines are set out below.
SG payment deadlines
|Payment period||SG deadline for each quarter|
|1 July – 30 September||28 October|
|1 October – 31 December||28 January|
|1 January – 31 March||28 April|
|1 April – 30 June||28 July|
Late and non-payment of SG
If an employer fails to make SG contributions or pays after the quarterly deadline, they must complete and provide a Superannuation Guarantee Charge (SGC) statement to the ATO the following month. The ATO may impose the Superannuation Guarantee Charge (SGC) on the employer. This includes the unpaid super contributions, interest and an administration fee.
If an employer fails to lodge an SGC statement, or fails to pay the outstanding amount, there are further penalties including a general interest charge (in addition to the interest charged on the super contributions), director penalty notices.
If a company does not pay SG, or pays it late, a director of the company becomes personally liable for any SG debt and any accrued penalties.
You must keep a record of offering choice of fund to any of your employees who have the right to choose their own super fund. You can offer choice of fund by providing them with the Choice of Fund Form when they start employment:Choice of Fund form (76.29 KB)
You must also keep records confirming that SG contributions have been paid for each employee, the amount, when it was paid, and to what super fund.
Reporting SG contributions
The Government requires reporting on certain super payments you make on behalf of your employees. If you make extra super contributions for an employee (e.g. Salary sacrifice) you need to report those extra contributions on your employee's annual payment summary if:
- the contributions are more than you're required to pay by law, an industrial agreement or the super fund's governing rules; and
- the employee has the capacity to influence the amount you contributed.
The extra amount is called a reportable employer super contribution. You report only the extra amount on the employee's payment summary – you don't report compulsory super contributions, such as Super Guarantee payments.
Reportable employer super contributions can affect a range of government entitlements and obligations for your staff.
For more information and help working out if contributions are reportable, refer to the ATO.
This information provided in this guide is not comprehensive. For more information about your superannuation obligations as an employer, please refer to the Australian Taxation Office.