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  • Module 4: Calculating super guarantee

    This module explains:

    You can also check what you've learned in:

    How to calculate super guarantee

    The minimum super you must pay each quarter for each eligible employee is called super guarantee, which is currently 9.5% of an employee's ordinary time earnings.

    Ordinary time earnings are usually the amounts your employee earns for their ordinary hours of work. It includes things like commissions, shift loadings and allowances, but not overtime payments.

    The Checklist: Salary or wages and ordinary time earnings will help you identify what payments are considered salary or wages and whether they are part of ordinary time earnings for super guarantee purposes. Remember, super guarantee is calculated on ordinary time earnings and not total salary and wages. When using the checklist, ordinary time earnings is shown in the right-hand column.

    To calculate super guarantee, multiply your employee's ordinary time earnings for the quarter by the super guarantee rate.

    Example: Calculating super guarantee

    During a quarter, Kylie's ordinary time earnings were $8,000.

    The super contribution Kylie's employer had to pay for Kylie for that quarter was calculated as ordinary time earnings × super guarantee rate ($8,000 × 9.5%) which equals $760.

    Kylie's employer must contribute at least $760 to a complying super fund or RSA for Kylie by the due date. Due dates will be discussed in Module 5 (Paying super contributions).

    End of example

    If you make super contributions under an award, check that they are enough to satisfy both the award and the super guarantee.

    Generally, you can claim a tax deduction for super guarantee payments you make as long as you pay them on time and to the right fund.

    You can claim the tax deduction in the same financial year your payment is received by the super fund.

    Amounts included in the calculation

    Make sure you understand the following terms as they are needed when calculating super guarantee:

    Ordinary time earnings

    Ordinary time earnings refers to what your employees earn for their ordinary hours of work. Ordinary time earnings include:

    • over-award payments
    • commissions
    • shift loading
    • allowances
    • bonuses.

    Our Checklist: Salary or wages and ordinary time earnings shows various types of payments that employees may receive and whether those payments are considered part of ordinary time earnings. (Note: ordinary time earnings are shown in the column on the right-hand side of the checklist.)

    Ordinary hours

    Your employee's ordinary hours will be the normal hours they work, unless their hours are specified in an award or agreement.

    If you can't determine the normal hours of work (for example, for casual workers), the actual hours the employee works will be their ordinary hours of work.

    Under the Fair Work Act 2009, ordinary hours for workers who are not under an award or agreement is capped at 38 hours. This definition does not override the superannuation laws stated above.

    Overtime payments

    Payments for work performed outside an employee's ordinary hours of work are not ordinary time earnings. This applies even if the:

    • payments are calculated at an hourly rate
    • employee gets a specific loading
    • payments are calculated as an annualised or lump sum component of a total salary package.

    However, if you can't distinctly identify overtime amounts, the hours actually worked will be included in ordinary hours of work.

    Back pay

    You must pay super guarantee on back pay (of salary or wages) even if the employee no longer works for you. If you don't, you'll be liable for the super guarantee charge.

    Example: Calculating super guarantee for back pay

    On 30 June 2017, Sue finished her employment with company ZYX.

    In September 2017, the company back-paid Sue covering the period from 1 January 2017 to 30 June 2017.

    The company must pay a super contribution for the back pay and they must do this by the quarterly due date of 28 October 2017.

    The company will need to calculate Sue's super contribution at 9.5%. The payment should generally be made into the fund the company paid Sue's last super contribution.

    End of example

    Maximum contribution base

    You don't have to pay super guarantee for your employee's earnings above a certain limit, called the maximum super contribution base.

    For 2018–19, the maximum contributions base is $54,030 per quarter. This base is indexed annually and is available before the start of each financial year. It does not apply to other mandated contributions, such as contributions you pay under an award.

    While the maximum contributions base limits the amount that you have to pay for super guarantee purposes, funds can accept contributions above it. Your employees should be aware that super guarantee contributions count towards their concessional contributions cap in the year the fund receives the contribution.

    Using the super guarantee contributions calculator

    You can use the Super guarantee contributions calculator to work out how much super to contribute for your eligible workers.

    Using the calculator, you can select the minimum super guarantee rate or increase the rate based on the arrangement you have with your employees.

    The calculator allows you to calculate your contributions weekly, fortnightly, monthly or quarterly; based on your business needs. Consequently, this calculator tool does not incorporate the super guarantee eligibility criteria or the maximum contribution base.

    The calculator displays your super guarantee calculation. It will provide the:

    • sub-total of super guarantee amounts payable to each super fund
    • total of all super guarantee contributions payable.

    Note: Norfolk Island employers should not use this tool, as a different super guarantee rate currently applies (see Norfolk Island tax and super).

    Activity

    Take a few minutes to explore the Super guarantee contributions calculatorThis link opens in a new window.

    Before you start, you will need the following information:

    • the personal details of your employees, including their name (optional) and super fund details (optional)
    • the ordinary time earnings amount that super is payable on for each employee for the period.

    Check your understanding

    Work through the example below and attempt the questions to check your understanding of the topics in this module.

    Example: Calculating super guarantee for an employee

    Amanda is your employee.

    During the first quarter of the financial year, Amanda earned:

    • Ordinary time earnings of $3,000
    • $200 in overtime payments
    • a $50 bonus relating to overtime only.

    You know that Amanda is eligible for super guarantee.

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

    Question 1: How do you work out her super guarantee payment?

    A. The same way as any employee eligible for super guarantee: her ordinary time earnings × 9.5%.

    B. Pay her an additional 9.5% on top of her usual pay each week and she takes care of the rest.

    Question 2: What payments will make up Amanda’s ordinary time earnings?

    Use the Checklist: Salary or wages and ordinary time earnings to decide whether you'd answer A, B, C or D below. (Note: ordinary time earnings is shown in the column on the right-hand side of the checklist.)

    A. Ordinary time earnings of $3,000

    B. $200 in overtime payments

    C. $50 bonus in respect to overtime only

    D. All of the above

    Question 3: How much super guarantee do you need to pay for Amanda?

    Use the Super guarantee contributions calculatorThis link opens in a new window and then decide which is the correct answer.

    A. $350

    B. $285

    The correct answers are available below.

    End of example

    Answers

    Question 1: A is correct. Amanda’s super guarantee is calculated as her ordinary time earnings × 9.5%.

    Question 2: A is correct. The $3,000 is ordinary time earnings. The overtime and bonus for overtime are not ordinary time earnings.

    Question 3: B is correct. Super guarantee = ordinary time earnings × 9.5% = $3,000 × 9.5% = $285.

    Summary of Module 4

    Remember, when calculating super guarantee:

    • super guarantee equals ordinary time earnings multiplied by 9.5%
    • use the salary or wages and ordinary time earnings checklist to help you identify which payments are salary or wages and if they are considered part of ordinary time earnings for super guarantee purposes
    • use the Superannuation guarantee contributions calculator to work out how much super to contribute for your eligible workers.
      Last modified: 09 Apr 2019QC 58510