Understanding Super Guarantee Obligations in Australia
In Australia, employers have a legal responsibility to contribute to their employees' retirement savings through a system known as the Superannuation Guarantee (SG). The SG ensures that all eligible workers receive a percentage of their salary or wages into a superannuation fund, helping them build a nest egg for their retirement. The information below aims to provide an overview of super guarantee employer obligations in Australia, helping both employers and employees understand their rights and responsibilities.
- What is the Super Guarantee?
The Super Guarantee is a government-mandated program designed to assist Australian workers in saving for their retirement. Under this scheme, employers are required to make regular contributions to their employees' superannuation accounts. The current minimum SG contribution rate is 11% of an employee's ordinary time earnings (OTE). It's important to note that this rate may change over time due to legislative amendments.
2. Who is Covered by the Super Guarantee?
The Super Guarantee applies to most employees in Australia, with only a few exceptions. Employees covered include:
- Full-time, part-time, and casual workers over age of 18
- Individuals aged 18 or below if they work more than 30 hours in a week
It's crucial for employers to correctly identify eligible employees and ensure they receive SG contributions.
3. Key Employer Responsibilities
Employers have several important obligations under the Super Guarantee system:
a. Calculate SG Contributions: Employers must calculate the correct SG contribution amount based on their employees' Ordinary Times Earnings (OTE). OTE refers to the earnings an employee receives for their ordinary hours of work, excluding any overtime, bonuses, or other irregular payments. It is important for employers to understand and correctly calculate OTE when determining their Super Guarantee obligations.
b. Make Timely Contributions: Contributions must be made at least quarterly, with specific due dates to avoid penalties (current due dates
in table below).
Payment due date
||1 July – 30 September
||1 October – 31 December
||1 January – 31 March
||1 April – 30 June
From 1 July 2026 (not yet law) employers will be required to pay their employee’s super at the same time as their salary and wages. Known as “payday super”, employers will be able to manage their super payments more frequently ensuring fewer liabilities building up and employees will find it easier to keep track of their payments. The benefit for Employees is that the contributions are protected and allows the accumulation of more wealth in their super fund.
c. Use the Employee's Chosen Fund: Employees have the right to choose their superannuation fund. Employers must ensure that contributions are made to the employee's selected fund.
d. Keep Records: Accurate records of SG contributions, calculations, and employee details must be maintained for at least five years.
e. Provide Information: Employers should provide employees with regular statements detailing their superannuation contributions and fund details.
4. Penalties for Non-Compliance
Failure to meet super guarantee employer obligations can result in severe penalties. The Australian Taxation Office (ATO) enforces compliance and may impose fines, interest charges, and other penalties on employers who do not meet their obligations. A Super Guarantee Charge (SGC) statement is required to be lodged by employers to report and calculate the charges and penalties associated with late or underpaid superannuation contributions for their employees. Employers must submit the SGC statement to the ATO within 1 month of the original due date of the superannuation guarantee payment each quarter.
5. Salary Sacrifice and Additional Contributions
While the SG covers the minimum required contribution, employees can choose to make additional contributions or use salary sacrifice arrangements to boost their super savings. Employers should facilitate these arrangements and ensure they meet legal requirements.
6. Regular Reporting
Employers are required to report their super contributions and payments to the ATO through the Single Touch Payroll (STP) system. This helps
maintain transparency and compliance with superannuation laws.
Understanding super guarantee employer obligations is vital for both employers and employees in Australia. Employers must fulfill their legal responsibilities by making timely and accurate contributions to their employees' superannuation funds, while employees should actively monitor their super savings to secure a comfortable retirement.
Compliance with super guarantee obligations not only avoids penalties but also contributes to the financial security and well-being of Australian workers in their retirement years. Staying informed and up-to-date with changes in superannuation laws is crucial for all parties involved.
The ATO has a comprehensive Super Guarantee employer obligations online course that is available for free. It will take approximately 2 hours to complete and provides detailed explanations and resources to assist you with understanding Superannuation Guarantee. You can find the course here:
If you have specific questions or concerns about super guarantee obligations or if you have late or unpaid super please contact our office and one of the Aegis Team will be able to provide you with guidance.