Super is money you pay for your workers to provide for their retirement.
Generally, if you pay an employee $450 or more before tax in a calendar month, you have to pay super on top of their wages.
The minimum you must pay is called the super guarantee (SG):
- the SG is currently 9.5% of an employee’s ordinary time earnings
- you must pay the SG at least four times a year, by the quarterly due dates
- you must pay and report super electronically in a standard format, ensuring you meet SuperStream requirements
- your super payments must go to a complying super fund – most employees can choose their own fund
- if you don’t pay the SG on time, you may have to pay the super guarantee charge.
If your employee is under 18 or is a private or domestic worker, such as a nanny, they must also work for more than 30 hours per week to qualify. For example, you will have to pay them super on top of their wages for each week that the employee has worked more than 30 hours.
You have to pay super for some contractors, even if they quote an Australian business number (ABN).
You pay super regardless of whether the employee:
- is full-time, part-time or casual
- receives a super pension or annuity while still working – including those who qualify for the transition-to-retirement measure
- is a temporary resident, such as a backpacker or a working holiday maker – when they leave Australia, they can claim their super through the Departing Australia superannuation payment (DASP) program
- is a company director
- is a family member working in your business – provided they are eligible for SG.
STP & Superannuation Guarantee Charge
As a result of the implementation of Single Touch Payroll (STP) the ATO now has an un precedented level of visibility of super information. The ATO is now starting to use the data from STP to warn employers who appear to not be paying the required SG on time, or not paying it at all. There are some employers that have been notified that their SG was paid late, and due date reminders have also been sent to some employers.
Failure to pay your super contribution by the 28th day after the end of the quarter will result in a Superannuation Guarantee Charge (SGC). The SGC is made up of the original super contribution (9.5%) plus interest & penalties as below:
- the super (9.5%) & penalties are not tax deductable;
- the employer must pay notional interest (in place of earnings that would have accrued had the SG contribution been made on time), and an administration fee ($20 per employee, per quarter);
- there are further penalties for late payment and failure to lodge an SGC statement;
- the shortfall in super contributions is based on ‘salary & wages’ which is potentially higher than Ordinary Time Earnings (OTE);
- the employer will have to put time into preparing the SGC statement.
An ‘on time’ payment relates to the date that the funds reach an employee’s superannuation fund and not the date that you pay it, so this will require you to process your super contributions about 10 days before the quarterly due date to ensure that the super is paid on time.
Quarterly payment due dates for SG Contributions are as below:
Period Due Date
1 Jul – 30 Sept 28 Oct
1 Oct – 31 Dec 28 Jan
1 Jan – 31 Mar 28 Apr
1 Apr – 30 Jun 28 Jul
Please contact me if you have any questions or concerns in relation to your superannuation guarantee obligations.