Superannuation Guarantee

In addition to employees’ salaries and wages, employers are required to pay superannuation contributions on behalf of all eligible employees. This compulsory contribution is called the superannuation guarantee. The definition of employee for this purpose includes certain contractors. The minimum contribution from 1 July 2023 is 11% of each eligible employee’s earnings base (usually their ordinary time earnings) and must be paid within 28 days after the end of each calendar quarter. Employers must also provide employees with a choice of superannuation fund.

The minimum contribution rate increased from 10.5%  to 11% on 1 July 2023. The superannuation guarantee has been legislated to rise incrementally each year until it reaches 12% in 2025.

Employers are generally required to pay superannuation contributions for employees if they are:

• Over the age of 18 (no upper age limit applies)
• Under 18 years old and works more than 30 hours per week.

From 1 July 2022, the Australian Government removed the $450.00 per month threshold for super guarantee eligibility. This means you need to pay super guarantee contributions on all ordinary time earnings. Before 1 July 2022 superannuation guarantee was only paid when an employee earned $450.00 or more (before tax) in a calendar month.

If an employer fails to make the minimum contributions for a quarter by the due date, the employer is liable for the Superannuation Guarantee Charge (SGC). The SGC comprises the unpaid contributions calculated on a higher earnings base, plus an interest charge (which is credited to the employee’s superannuation account) and an administration fee. The employer cannot claim an income tax deduction for the SGC.

The Australian Taxation Office (ATO) provides the following tools to help you understand and meet your obligations:

• Superannuation Guarantee Charge (SGC) statement and calculator – calculate the SGC liability and prepare the SGC statement.
• Employee/contractor decision tool – determine whether new or existing workers are contractors or employees (for tax and super purposes).
• Superannuation guarantee eligibility decision tool – to see whether an employer needs to make super contributions for employees.
• Superannuation guarantee contributions calculator – calculate how much super an employee should be contributing for eligible workers.