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Superannuation guarantee - Tax basics for non-profit organisations |
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Note: This document forms part of our publication Tax basics for non-profit organisations. To view the full publication, click here. |
Superannuation guarantee
As an employer you must provide a minimum level of superannuation support for your eligible employees – currently 9% of an employee’s earnings base – or lodge a Superannuation guarantee statement and pay the superannuation guarantee charge (SGC).
Who is covered by superannuation guarantee?
Most employees, whether full-time, part-time or casual, are covered by the superannuation guarantee legislation. The definition of employee is extended for superannuation purposes to cover some additional categories of workers, including company directors, some artists, sportspeople and certain independent contractors.
Exceptions include employees who are:
- paid less than $450 (before tax) in any calendar month (superannuation does not have to provided in respect of that month)
- aged 70 years and over
- non-resident employees who are paid solely for work undertaken outside Australia
- under 18 years old and employed part-time (that is, employed to work for no more than 30 hours per week), or
- paid to do work of a domestic or private nature for 30 hours per week or less.
For a full list of exemptions, please refer to – Superannuation guarantee - a guide for employers (NAT 1987).
What organisations are exempt from the superannuation guarantee charge?
No organisations are exempt – all are subject to the superannuation guarantee legislation, including those organisations that are exempt from income tax.
How much is your organisation required to pay?
The minimum amount of superannuation support you must provide for your employees for the 2002–03 and later years is 9% of each employee’s earnings base (usually ordinary time earnings).
Any existing superannuation obligations under an industrial award count towards the minimum level of support, as do payments made under a salary sacrifice arrangement. However employee contributions do not count towards the employer’s obligations.
Employer contributions must be paid at least quarterly to a complying superannuation fund or retirement savings account. The table shows the quarterly due dates.
Superannuation guarantee charge
If you don’t pay the minimum level of superannuation support for your employees by the quarterly cut-off date, you must lodge a Superannuation guarantee statement and pay the superannuation guarantee charge to the Tax Office. The charge includes the shortfall between what you should have paid and what you actually paid, and administration and interest components.
If you make sufficient superannuation contributions for your eligible employees by the relevant due dates, those contributions are generally tax deductible. However, the superannuation guarantee charge is not tax deductible.
From 1 January 2006, late employer contributions made to a fund or RSA on or before the due date for lodgment of their quarterly statement can offset part of the shortfall and nominal interest components of the superannuation guarantee charge if the employer makes an election. The employer has to lodge a Superannuation guarantee charge statement – quarterly (NAT 9599) with a late payment election and pays only the remaining part of the superannuation guarantee charge to the Tax Office.
Superannuation quarters and due dates
Superannuation guarantee quarter |
Due date for payment of superannuation contributions |
Due date for lodgment of statement and payment of superannuation guarantee charge |
1 July – 30 September |
28 October |
28 November |
1 October – 31 December |
28 January |
28 February |
1 January – 31 March |
28 April |
28 May |
1 April – 30 June |
28 July |
28 August |
Reporting to employees
Note: From 1 July 2003 employers were required to report to their eligible employees (in writing) the amount of contributions made on their behalf. This requirement had to be within 30 days from the date on which the employer’s last contribution for the quarter was made.
From 1 January 2005, employers are not required by the superannuation guarantee legislation to report to employees on employer superannuation contributions made on or after 1 January 2005.
Choice of superannuation funds
From 1 July 2005, most employees have the right to choose the fund into which their superannuation guarantee contributions are paid. Previously, only the employer could choose the fund to which the contributions of their employees were paid, unless it was set out in an award or other industrial agreement.
The choice of superannuation fund was extended from 1 July 2006 to cover more employees. Generally, employers must offer a choice of superannuation fund to an employee unless they make superannuation contributions for an employee under:
- an Australian Workplace Agreement (AWA) or a certified agreement under the Workplace Relations Act 1996 or the Industrial Relations Act 1988
- a former state industrial agreement known under WorkChoices as a 'preserved state agreement', or
- a state industrial award or state industrial agreement.
If an employee is engaged under a federal award an employer must offer choice whether or not that award requires contributions to be made to a superannuation fund. An employer must accept an eligible employee’s valid choice even if it is a fund not mentioned in the federal award that governs their employment.
Most employees who are members of defined benefit funds will not be eligible to choose a superannuation fund.
You must give your eligible employees a standard choice form which will advise them of the important matters they should consider before they exercise choice (eg insurance coverage). Where an employee does not choose a fund, you must continue to make contributions to the default eligible choice fund specified in the standard choice form provided that the fund offers a minimum level of insurance cover.
For employees who were eligible employees prior to the introduction of choice, you were required to provide them with a choice of superannuation fund by 29 July 2005. For new eligible employees after 1 July 2005 you must provide them with a standard choice form within 28 days of the day they start work with you. If you fail to comply with the choice of fund requirements, your individual superannuation guarantee shortfall can be increased.
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For more information refer to:
To obtain these publications, see More information. If you need more information about categories of employees, or if you need to find out whether the fund you have chosen meets government standards:
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Last Modified: Monday, 15 October 2007
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