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  • Module 2: Working out if you have to pay super

    Who is eligible for super guarantee?

    Prior to 1 July 2022, if you paid an employee $450 or more (before tax) in salary or wages in a calendar month, you would generally also need to have paid super guarantee for them. Salary or wages includes any overtime.

    From 1 July 2022 you need to pay super guarantee contributions to an employee's super fund regardless of how much they are paid.

    This includes contractors who are eligible for super, even if they quote an Australian business number (ABN) – (see Contractors).

    Employees under 18

    Prior to 1 July 2022, you paid super for an employee aged under 18 years if:

    • they worked for you more than 30 hours in a week
    • you paid them $450 or more (before tax) in salary or wages in a calendar month.

    From 1 July 2022, you must pay super on payments you make to these employees if they work for you more than 30 hours in a week, regardless of how much they get paid.

    You must pay super guarantee for eligible employees, even if the employee:

    • works full time, part time or on a casual basis
    • receives a super pension or annuity while they're still working – including those who qualify for the transition-to-retirement measure
    • is a temporary resident – when the employee leaves Australia, they can claim the super contributions you made through the Departing Australia Superannuation Payment
    • works overseas (see Employees working overseas)
    • is a company director
    • is a family member working in your business.

    You don't have to pay super guarantee for individuals for whom the Commissioner of Taxation has issued an SG employer shortfall exemption certificate. Employees that earn enough income to exceed the concessional contribution cap from two or more employers qualify for the exemption certificate

    Contractors

    Contractors paid mainly for their labour are employees for super guarantee purposes. This is the case even if the contractor quotes or provides an ABN. These contractors are known as employees for super guarantee purposes.

    You must make super contributions for these individuals if you pay them:

    • under a verbal or written contract that is wholly or principally for their labour – that is, more than half the dollar value of the contract is for their labour
    • for their personal labour and skills – which may include physical labour, mental effort or artistic effort – and not to achieve a result
    • to perform the contract work personally – that is, they must not delegate the work.

    If you make a contract with someone other than the person who'll actually provide the labour – for example, with a company, trust or a partnership – you don't pay super to the person providing the labour.

    Domestic workers

    If you engage someone to do work of a domestic or private nature, you have to pay super guarantee for them:

    • Prior to 1 July 2022
      • they work for you more than 30 hours in a week and
      • you paid them $450 or more (before tax) in salary or wages in a calendar month
       
    • From 1 July 2022
      • if they work for you more than 30 hours in a week, regardless of how much you pay them.
       

    'Domestic or private' means work either:

    • relating personally to you (not to a business of yours)
    • relating to your home, household affairs or family – such as work by a nanny, housekeeper or carer.

    If you use funds from the National Disability Insurance Scheme (NDIS) to engage a carer or other domestic help, you may have to pay super guarantee for these workers. This only affects people who choose to manage their NDIS plan themselves.

    Employees working overseas

    If you send an Australian employee to work temporarily in another country, you must continue to pay super guarantee contributions for them in Australia.

    The other country may require you or your employee to pay super (or equivalent) there as well. However, Australia has bilateral agreements with some countries so that you don't have to pay it in both countries. This is as long as you continue to pay compulsory super contributions for the employee in Australia.

    To gain exemption from the super payment in the other country if a bilateral agreement exists, you need to show the authorities in the other country a certificate of coverage. You get this certificate from the ATO.

    To get a certificate of coverage, you can:

    If you're self-employed

    If you're self-employed, that is, a sole trader or a partner in a partnership, you can choose whether to contribute super for yourself. However, you may want to make personal contributions to a super fund as a way of saving for your retirement.

    How to check if your employees are eligible

    The easiest way to check if someone is eligible for super guarantee is to use the Super guarantee eligibility tool.

    Take a few minutes to explore the Super guarantee eligibility toolThis link opens in a new window.

    Check your understanding

    Use the following example and questions to test your understanding of this module.

    Example: Under 18 years of age and working more than 30 hours in a week

    Lily is 17 years old and works a 32-hour week once a month at her local hardware store, earning $382 before tax. She also works 6 hours a month as a barista for a cafe down the road.

    Lily works over 30 hours in one week in her job with the hardware store. Lily does not work 30 hours in a week in her job as a barista

    Try the following quick questions. What would your answers be?

    Question 1: As Lily works over 30 hours in one week in her job with the hardware store do you need to consider super guarantee for Lily?

    A. Lily is eligible for super guarantee and I will need to pay her super from 1 July 2022.

    B. Lily is under 18 so I don’t need to worry about super guarantee for her.

    Question 2: As Lily does not work 30 hours in a week in her job as a barista do you need to consider super guarantee for Lily?

    A. Ask her if she has been paid super for her work with the hardware store

    B. Lily is not eligible for super guarantee.

    End of example

    Answers

    Question 1: A is correct. Lily has worked works over 30 hours in one week in her job with the hardware store. Lily won't be entitled to super guarantee for any weeks she works less than 30 hours for the hardware store.

    Question 2: B is correct. As Lily does not work 30 hours in a week in her job as a barista, she won’t be entitled to super guarantee for this work.

    Summary of Module 2

    Remember, when working out if you have to pay super for your employees:

    • identify employees who are eligible for super
    • use the Super guarantee eligibility tool
    • From 1 July 2022, for employees under 18 years old, you must pay super guarantee if they work for more than 30 hours in a week.
    • you need to pay super guarantee for some contractors, From 1 July 2022, if you pay a contractor mainly for their labour, you will need to pay super regardless of how much you pay them. This is the case even if they quote an ABN.
    • from 1 July 2022, you generally need to pay super guarantee if your employee is a private or domestic worker and works for more than 30 hours per week regardless of how much you pay them.
      Last modified: 01 Jul 2022QC 58510