Superannuation (super) is a long-term investment for Australians that grows over time to assist people with saving for retirement. This payment is a legal requirement of hiring employees and must be factored into your costs. Failing to pay super can lead to penalties, fines, and back payments through the ATO.
Business owners must pay super for eligible employees and eligible contractors. The minimum super you must pay each quarter for each eligible employee and eligible contractors is called the super guarantee (SG).
How do I know if an employee is eligible for super?
You can use the tool by the ATO to determine employee eligibility. This decision tool helps determine if your employees are eligible for super guarantee (SG), including any independent contractors treated as employees for super purposes. Find the tool here
How do I know how much super to pay?
You can view the current SG rates here.
The SG amount changes regularly so it is best to check with the ATO to ensure you are using the correct rate.
How do I work out how much super to pay?
To work out what you must pay, multiply your employee’s ordinary time earnings OTE for the quarter by the SG rate (or the percentage you use if you’re paying super at a higher rate). If you are using a software provider such as Xero, MYOB, QuickBooks to pay employees the software should calculate the super you need to pay your employees for you. Pending your subscription type it may even lodge and pay these amounts for you. You will need to check your software to ensure your settings are correct and the super rate is increasing in line with the government requirements.
When do I have to pay employees super?
Super payments are currently due quarterly. When a super due date falls on a weekend or public holiday, your contribution must be received by the fund on or before the next business day. We recommend payments to be made at least 10 days prior to the due date. Some superfunds may require payments to be made monthly e.g. Cbus. Please refer directly to the superfund guidelines for further details. You can also make payments more frequently than quarterly, for example fortnightly or monthly. If you do, ensure you pay your total super guarantee (SG) contribution for the quarter by the due date.
Why you need to pay it
In Australia, employers are legally required to pay super at the minimum rate into their employees’ funds.The ATO has become incredibly strict on these payments. Directors are personally liable for these payments and failure to pay could result in a Director Penalty Notice (DPN) being issued. Staying compliant prevents costly audits, interest charges, and employee complaints.
In addition, if super contributions are paid late they are no longer tax deductible.
What’s new for super?
The Small Business Superannuation Clearing House is being retired.
This free online service provided through the ATO helps small businesses pay super for employees through a single payment. This service will be retired from 1 July 2026.
Employers will be required to pay their employees’ super at the same time as their salary and wages, known as Payday Super. This measure is not yet law. The ATO advises that small businesses will be guided in transitioning to a commercial alternative that is fit-for-purpose for Payday Super.
We’ll keep you posted!
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