As an employer, you need to be aware of any super obligations you may have for your current employees.
You have to pay super for your eligible employees at least four times a year, within 28 days after the end of each quarter of the financial year. See Key superannuation dates for employers to find out more about when to pay super.
How much super do I have to pay?
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The minimum super amount you have to pay is 9% of each eligible employee’s earnings base. Your employee’s earnings base is generally their ordinary times earnings, from 1 July 2008 ordinary time earnings should always be used.
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To help you work out how much super you have to pay each employee, use our online superannuation guarantee contributions calculator.
What is an employee’s earning base?
From 1 July 2008, the earnings base for most employees is their ‘ordinary time earnings’, which is generally what they earn for their ordinary hours of work.
Before 1 July 2008, some employees did not have ‘ordinary time earnings’; rather, the basis of their super was another earnings base. This may have been contained in:
- an industrial award
- an existing agreement they have with their employer
- a fund’s trust deed, or
- legislation.
If an employee’s earnings base changes from quarter to quarter, remember to work out the amount of super you pay in line with the earnings base changes.
What if I do not pay enough super for my employees?
You will be liable for the superannuation guarantee charge.
For more information see Charges.
When can I claim a full tax deduction for contributions?
Super payments are tax deductible in the financial year in which you pay them. From 1 July 2007 you can claim a full tax deduction for super payments you make for employees under the age of 75.
You can also claim a tax deduction for super payments you make for employees aged 75 and over, if you have to make the payments because your employee is employed under:
- an industrial award;
- a determination; or
- a notional agreement preserving state awards.
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You cannot claim tax deductions for charges you pay, including the Superannuation guarantee charge.
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If you have a current employee who is eligible to choose their fund, you must provide them with a Standard choice form.
What if I change my employer fund?
If you change your employer fund or you find out that a particular fund is no longer a complying fund, you must provide a Standard choice form to all your affected employees within 28 days.
How often can my employee change funds?
Employees can only nominate one fund every 12 months. You do not have to accept an employee’s request for payments to be made to a new fund if they have already changed funds within the previous 12 months.
Can an employee add to their own super?
Yes, your employees can add to their own super from their before-tax (salary sacrifice) or after-tax income.
Do my employees after tax contributions count towards my 9%?
No. Payments your employees make from their after-tax income to their super fund do not count towards the 9% super you have to pay.
Can I enter a salary sacrifice arrangement with my employee?
If you offer your employees the option of negotiating a salary sacrifice:
- you can claim a full tax deduction for the amount your employee sacrifices into their super, even if they pay more than the compulsory amount
- the amount your employee sacrifices can count towards the 9% super you have to pay, depending on the arrangement you have with them, and
- your employee will increase their total super benefits and reduce their taxable income.
There is a concessional tax rate cap (which is currently $50,000 per year for employees under age 50) on super contributions made by employers. Your employee’s salary sacrificed contributions will also count toward this cap as they are considered employer contributions. Anything over this cap amount will be taxed at a rate of 46.5%.
For more information, see Salary sacrificing.
Do I have to pass on my existing employees TFN details?
From 1 July 2007 whenever an employee fills out a Tax file number declaration form (NAT 3092), you must pass on their TFN to the super fund of retirement savings account if you make contributions for them .This applies to both current and new employees.
You need to give the fund the TFN within 14 days of receiving the employee’s Tax file number declaration form. But if you do not make a contribution for the employee in that period, you may pass on the TFN when you make a contribution.
You could face charges if you do not pass an employee’s TFN on to their super fund on time.
For more information on passing on your TFN details see Changes to super.
What happens if I don’t pass on the TFN?
If you do not pass on an existing employee’s TFN:
- the super fund may have to pay extra tax on the amount they receive (this tax will come out of your employees account),
- the super fund will not be able to accept any contributions your employee pays out of after-tax income, even if they are paid through your salary system and
- your employee may miss out on super co-contributions.
How do I avoid paying unnecessary charges?
To avoid paying extra costs in relation to super make sure you:
- offer all eligible employees a choice of super fund within 28 days of them starting work
- pay the minimum 9% super into an employee’s chosen super fund, and
- make all your employees’ super payments by the quarterly cut-off dates each year.
See super obligations for more details
What is the superannuation guarantee charge?
The superannuation guarantee charge is a penalty incurred if you do not pay enough super, or if you miss the cut-off dates.
If this occurs, you have to lodge a Superannuation guarantee charge statement –quarterly and pay the superannuation guarantee charge to the Tax Office. This will include interest and the administration fee.
Use our Superannuation Guarantee Charge (SGC) statement and calculator tool to calculate your SGC liability and prepare the SGC statement to be lodged with the Tax Office.
You cannot claim tax deductions for the superannuation guarantee charge.
What is the choice liability?
The choice liability is a charge incurred if you have not offered an eligible employee a choice of super fund or you have paid their super into the incorrect fund you have to pay choice liability.
If this occurs, you have to lodge a Superannuation guarantee charge statement –quarterly and pay the superannuation guarantee charge to the Tax Office. This will include interest and the administration fee.
You cannot claim tax deductions for the choice liability.
Are there other fees and charges I should be aware of?
Yes, there are several other penalties and charges that may apply, including:
- General interest charge – If you lodge the superannuation guarantee charge statement – quarterly but don’t pay the charge by the due date, you have to pay an additional General interest charge.
- Administrative penalty – If the amount of superannuation guarantee you pay is less then it should have been, you may have to pay an additional penalty.
- Failing to keep records - A penalty of up to $3,300 for an individual and $16,500 for a corporation applies for failing to keep records.
- for copies of our publications, phone the publications ordering service on 1300 720 092
- to speak to a Tax Officer, phone our information line on 13 10 20 between 8.00am and 6.00pm, Monday to Friday
- write to:
If you do not speak English well and want to talk to a Tax Officer, phone the Translating and interpreting service on 13 14 50 for help with your call.
Last Modified: Thursday, 11 September 2008
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