If an employee is aged 18 or over and is paid $450 or more before tax in a calendar month, employers must pay super on top of those wages. The minimum amount is called the super guarantee (SG), and is currently 9.5% of an employee’s ordinary time earnings.
Employers are required to the SG at least quarterly, by the due dates as stipulated by the Australian Tax Office (ATO). These payments are made electronically via a SuperStream compliant system to ensure data and money is transmitted between the employer, the super fund, service providers and the ATO. Employers who fail to pay the SG by the due dates may be required to pay an additional non-tax deductible penalty fee.
An employer is not required to make SG payments for an employee aged 75 or over.
self-managed super funds
There are certain minimum standards and conditions that apply when accepting contributions to a self-managed super fund (SMSF). Members must have a tax file number (TFN), and mandated employer contributions for members can be accepted at any time, regardless of age or hours worked. ATO’s website provides more details.
employees working overseas
If an Australian employee is sent overseas to work on a temporary basis, employers must continue to pay super contributions in Australia for them. Some countries have a bilateral agreement with Australia that exempts the employer or employee from paying a super fee in that country, provided that the employer continues to pay the compulsory super contributions for that employee in Australia. The ATO is able to provide a certificate of coverage to exempt payment of superannuation in another country.
Salary sacrificed super contributions are classified as employer super contributions. This reduces the amount of super guarantee contributions that the employer is required to make unless otherwise agreed.
The pros and cons of salary sacrifice can be found in ‘salary sacrifice arrangements’ in chapter 14.
more articles about: guide to superannuation
- employer obligations
- superannuation reforms
- how superannuation works
- should they stay or should they go?
- superannuation contribution changes
- compliance options
- changes to SMSF Levy
- super contributions caps
- how to set up a super for an employee
- how much to pay and when
- help for small businesses
- modern awards
- insurance requirements
- salary sacrifice
- boosting employee super
- superannuation guarantee age limit
- records you need to keep
- the importance of communication