Employer Compulsory Superannuation Guarantee (SG) Contributions

Eligible employees are entitled to compulsory super contributions from the first day you employ them.  These super contributions have to be paid for each eligible employee to the correct super fund at least four times a year, by the quarterly cut-off dates shown in the following table.

When a cut-off date for payment falls on a Saturday, Sunday or public holiday, you can make the payment on the next working day after the cut-off date.

Employee voluntary contributions must be paid within 28 days.

How much is payable?

Employer superannuation contributions are a percentage of the employee’s earnings base (the ‘Ordinary Time Earnings’) up to an indexed maximum amount.  Refer to the table below

Maximum superannuation contribution base

From 1 January 2014, employers need to make super contributions to a fund that offers a MySuper product for any employee who does not select a preferred fund.

If your employer clients haven’t heard from their super fund about their MySuper arrangements, they should contact the fund now.

Refer to the link below for more details.

> The SG Contribution age limit was removed (up to 30 June 2013 – it was age 70).

> The SG rate will increase gradually from 9% to 12% as follows:
           

Information on Employee Payslips
From 1 July 2013 employers are required to report the amount and expected date of contribution payments on employee payslips.

Prior Year Maximums

The earnings base for calculating SG contributions is ordinary time earnings (OTE).

Salary or wages are used to calculate the SG charge if SG is not paid on time.

Checklist for salary or wages and OTE

The table below is an index to the examples and provides references to the relevant paragraphs in Ruling SGR 2009/2. See link below.
 

* These payments are specifically excluded from being salary or wages for SG purposes.  However they may be salary or wages for income tax purposes.

For a more detailed explanation of ordinary time earnings, refer to the link below – SGR 2009/2

Employers do not have to provide superannuation support for:

> employees paid less than $450 in a calendar month (although they must still provide superannuation support for any month in which the employee is paid $450 or more). This exemption ceases from 1 July 2022.

> employees aged 70 years and over.  This exemption ceases on 30 June 2013.  From 1 July 2013 employers cannot avoid paying SG Contributions simply because an employee is 70 or over

> employees under 18 years of age working 30 hours or less per week

> non-resident employees paid for work done outside Australia

> resident employees paid by non-resident employers for work done outside Australia

> some foreign executives who hold certain visas or entry permits under the migration regulations

> employees paid to do work of a domestic or private nature for not more than 30 hours a week (for example, a part-time nanny or housekeeper)

> employees who receive payments under the Community Development Employment Program

> members of the Army Reserve (the Army Reserve is not required to provide superannuation support)

> employees who had elected not to receive superannuation guarantee support because their accumulated superannuation benefits were more than the pension reasonable benefit limit (since abolished), or

> employees temporarily working in Australia for an overseas employer who is covered by a bilateral superannuation agreement (a certificate of coverage must be presented in order to receive the exemption)

Notes

Employers are still required to provide superannuation support for employees who are receiving their superannuation in the form of a non-commutable income stream while they are working.

Working people, aged 70 to 74 inclusive, can make personal superannuation contributions if they pass the 'Work Test'.  Prior to 1 July 2013, employers could not provide superannuation guarantee support for them.  This prohibition ceased on 1 July 2013.

Under the superannuation guarantee, an employee includes a person engaged under a contract that is mainly (more than 50%) or entirely for labour even if the contractor quotes an Australian Business Number (ABN).

If the contract is made with someone other than the person who will actually be providing the labour, there is no employer-employee relationship with the person actually doing the labour.  e.g:

> If you make a contract with a company, trust or a partnership, or

> If the person you have the contract with is free to hire other people to perform the work, even if the person ends up performing the work themselves.

Also, the employer has no superannuation guarantee obligations if the person contracted is engaged to produce a result.  In these situations the contract is not for the labour of the individual.