• Definitions

    Administration component

    The administration component forms part of the super guarantee charge. For each quarter of the 2003-04 financial and subsequent years, it is a $20 fee for each of your employees who have an individual shortfall (including choice) for the assessment period. This component is retained by us for the administrative costs incurred in processing the superannuation guarantee charge statement and distributing your employees' entitlements.

    Approved clearing house

    The Small Business Superannuation Clearing House is an approved clearing house. It lets employers with less than 20 employees pay their superannuation contributions to a single location in one electronic transaction. The service is free to eligible employers.

    See also:

    Choice liability

    The choice liability is 25% of the notional quarterly shortfall less any individual super guarantee shortfall for that employee for the quarter. It is limited to $500 per notice period per employee.

    See also:

    If you fail to meet your choice obligations you will be liable to pay a choice liability for your employee. Employers cannot have a choice liability for periods before 1 July 2005.

    Choice obligations

    Eligible employees are entitled to choose the super fund or retirement savings account you pay their compulsory super contributions to.

    Your obligations include the following:

    • offering a choice of super fund to your eligible employees
    • actioning your employee's choice of fund within two months of receiving a valid choice
    • not charging your employees a fee for changing super funds or for making super guarantee contributions to a super fund.

    Choice of super fund

    Eligible employees can nominate the super fund or retirement savings account where you pay their super guarantee contributions. The option to choose a super fund came into effect on 1 July 2005.

    Chosen fund

    The chosen fund is the super fund that your employee has nominated to receive their super guarantee contributions. Employees can nominate their chosen fund by:

    • completing a standard choice form (NAT 13080), or
    • providing the required fund information to you in writing.

    Employees eligible for a choice can also nominate a retirement savings account to receive their super guarantee contributions.

    Cut-off date

    The cut-off date is the date by which you must pay an employee's super guarantee entitlement to their fund. If sufficient super guarantee contributions are not paid by this date, you are required to lodge the Superannuation guarantee charge statement – quarterly (NAT 9599) and pay the super guarantee charge to us.

    The cut-off date is the 28th day of the month following the end of the quarter.

    Quarter

    Cut-off date

    1 July – 30 September

    28 October

    1 October – 31 December

    28 January

    1 January – 31 March

    28 April

    1 April – 30 June

    28 July

    Due date

    The due date is the date that the Superannuation guarantee charge statement – quarterly (NAT 9599) is to be lodged. The due date is one calendar month after the cut-off date.

    Quarter

    Due date

    1 July – 30 September

    28 November

    1 October – 31 December

    28 February

    1 January – 31 March

    28 May

    1 April – 30 June

    28 August

    Earnings base

    An employee's earnings base is the amount that you use to work out their super guarantee entitlement. From 1 July 2008, you must use ordinary time earnings as the earnings base to calculate the minimum super guarantee contributions required for your employees.

    The earnings base is limited to the maximum contribution base for the quarter.

    Employer fund (or default fund)

    The employer fund is the fund that you make compulsory super contributions to:

    • on behalf of your employees who are not eligible to choose a super fund
    • for eligible employees who have not exercised their right to nominate a fund.

    Late payment

    A late payment is a super guarantee payment made after the quarterly cut-off date. If you have made late payments for your employees before your original super guarantee charge assessment for the period is made, you may be eligible to offset these against the super guarantee charge.

    Late payment offset election amount

    The late payment election amount is the amount of late contributions that may be applied to offset the superannuation guarantee charge for the employee. The offset election amount cannot be greater than:

    • the sum of the late contributions you paid for your employee
    • the total of the employee's superannuation guarantee shortfall, choice liability and nominal interest.

    Any amount allowed as an offset cannot be used as a prepayment for current or future contributions or as a late payment for any other period.

    When electing to offset, consider that by making an election:

    • you will not be able to withdraw the election nor will you be able to reduce the late payment election amount
    • late payments used to offset the super guarantee charge are non-tax deductible for income tax purposes, and
    • late payments used to offset the super guarantee charge cannot be used as a prepayment for current or future super guarantee obligations, or as a late payment for any other period.

    You can also make a late payment offset election after lodging your Superannuation guarantee charge statement – quarterly by completing the Superannuation guarantee late payment offset election (NAT 14899). You generally have four years from the date the super guarantee charge becomes payable to make this election.

    Generally, for late payments of super contributions to be eligible for the offset, they must have been paid:

    • to a complying super fund or retirement savings account provider or approved clearing house after the cut-off date for payment
    • for the same employee for which the offset is claimed, and
    • before an original SGC assessment is made for the period.

    Maximum contribution base

    There is a limit to the amount of super support you need to provide for your employees. The maximum contribution base caps the earnings that you use to work out your employee's super guarantee entitlement.

    This cap applies to the following:

    • earnings base you use to work out your employees' quarterly super guarantee entitlement
    • total salary or wages you use to work out the super guarantee shortfall in the event that you have not made sufficient contributions before the cut-off date.

    The following table provides the maximum contribution base applicable from 1 July 2003.

    Income year

    Maximum contribution base
    (per quarter)

    2010-11

    $42,220

    2009-10

    $40,170

    2008-09

    $38,180

    2007-08

    $36,470

    2006-07

    $35,240

    2005-06

    $33,720

    Nominal interest component

    Nominal interest forms a component of the super guarantee charge. This component compensates your employee for the interest forfeited as a result of your late payment or non-payment of their super guarantee entitlement. Nominal interest is applied to the combined shortfall and choice liability components at a rate of 10% per annum.

    Nominal interest is worked out from the first day of the quarter to the quarterly due date or the date that the Superannuation guarantee charge statement – quarterly (NAT 9599) is lodged, whichever occurs later.

    Along with the shortfall and choice liability components, we forward the nominal interest component to your employee's fund after you have paid the super guarantee charge.

    Notice period (for choice of fund obligations)

    Your notice period for an employee will start on the later of the following:

    • 1 July 2005
    • the day that the employee is first employed by you if the employee started employment after 1 July 2005
    • the day after the preceding notice period has ended.

    You will receive written notification from us when your notice period has ended. A notice period can be made up of multiple quarters.

    If at the time of lodging a statement we have not previously written to you advising you that your notice period has ended, then your notice period will cover all quarters since 1 July 2005 for which you are lodging statements.

    Notional quarterly shortfall

    This is 9.5% of an employee's total salary and wages (limited to the maximum contribution base) for the quarter, reduced by the percentage of ordinary time earnings you paid as contributions to the correct fund before the quarterly cut-off date.

    Ordinary time earnings

    Ordinary time earnings are generally what your employees earn for their hours of work, including:

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

    From 1 July 2008 you must use ordinary time earnings to calculate the minimum super guarantee contributions for your employees.

    See also:

    Quarter effective date

    The quarter effective date for nominal interest calculations is the later of:

    • the due date
    • the lodgment date (that is, the date that you lodge the Superannuation guarantee charge statement – quarterly [NAT 9599] with us).

    Quarter start date

    This is the first day of the period that the super guarantee charge relates to. Regardless of when an employee started employment, you will use this date as the start date of your nominal interest calculation.

    Super guarantee shortfall

    The super guarantee shortfall is a component of the super guarantee charge. It is worked out by multiplying the notional quarterly shortfall percentage by the employee's salary or wages.

    Total salary or wages

    If you have not made sufficient super contributions before the cut-off date, the super guarantee shortfall is worked out using your employee's total salary or wages for the period. In some cases, your employee's salary or wages amount will exceed that of their ordinary time earnings.

    See also:

    Last modified: 13 Sep 2016QC 17278