A handy guide to paying super to employees
4-minute read
It’s great that your new business is of a size that requires you to take on staff. Amongst other things you’ll have to consider, is the need to pay your employees superannuation in addition to their wages. To help you with your planning, here is some basic information about your super obligations.
Key take-outs
- Employees earning $450 or more (before tax) in a calendar month generally qualify for super
- The current minimum rate of super contributions is 10% of earnings
- Super must be paid by specific dates using a specific electronic method
- Businesses must provide the option of a default super fund
Do I need to pay super to employees?
If your employee earns $450 or more (before tax) in a calendar month, you are required to pay them super in addition to their wages. Eligible workers include:
- full-time, part-time and casual staff,
- temporary residents such as backpackers,
- family members (if they are eligible),
- company directors,
- those already receiving a pension, and
- in some circumstances, contractors.
Examples of employees you don’t have to pay super to include any employees under 18 years old who work less than 30 hours a week; non-residents working for you overseas; temporary residents covered by a bilateral super agreement and employees who opt out of receiving super if you're covered by an SG employer shortfall exemption certificate.
More detailed information is available on the Working out if you have to pay super page of the Australian Taxation Office (ATO) website. You may also wish to use our Business Super Profile tool to check if you are on track with your super obligations.
How much super should I be paying my employees?
Generally, the super you pay staff must be at least 10% of their ‘ordinary time earnings’ (which include commissions, allowances and bonuses). Set by the Government, this amount is called the ‘Super Guarantee’.
You can pay staff a higher percentage as part of their salary package if you wish, but there are limits to how much they can receive before they are required to pay higher tax on their contributions.
The ATO has a handy Super Guarantee Contributions Calculator that may help you work out what to pay.
Is there a maximum limit to the amount of super I have to pay?
There is a quarterly maximum limit to how much Super Guarantee you are required to pay each employee, though they would need to be earning more than $58,920 in a quarter for this to be a consideration. Check the ATO website for the current maximum super contribution.
When must I pay the super into a fund?
You can pay super monthly – and some super funds require this frequency. But the minimum frequency is quarterly, and your business may face penalties if you miss these cut-off dates:
| Earnings received: | Pay super by: |
|---|---|
| 1 Jul – 30 Sept | 28 Oct |
| 1 Oct – 31 Dec | 28 Jan |
| 1 Jan – 31 Mar | 28 April |
| 1 Apr – 30 Jun |
28 Jul |
How do I go about setting up superannuation for employees?
Your staff members can choose to have super contributions paid into a superannuation fund that they nominate. Where a new employee does not choose a super fund, you must contact the ATO to see if the employee has an existing super fund – their ‘stapled’ fund. If they do, you must make payments to this account.
If the new employee doesn’t have a 'stapled' fund and doesn’t choose a fund, then you must create a new account in a superannuation fund that you nominate*. This is known as an ‘employer-nominated fund’ and must comply with certain requirements under the Government’s ‘MySuper’ initiative.
MySuper products – which include our own BT Super fund – are intended to be simple, low cost, and easy to compare. You can register for BT Super online in about five minutes.
Once you have chosen an employer-nominated fund, you should include its details in the ‘Standard Choice form’ you are required to give your employees.
How do I pay my employees’ super?
The government requires you to send contribution payments and data electronically in a standard format called ‘SuperStream’. Your employer-nominated fund may offer an online portal or ‘super clearing house’ to comply with this requirement, and some payroll systems (such as MYOB and Xero) incorporate the service.
If in any doubt about how to comply with your super obligations and/or make payments, visit the Employers section of the ATO’s SuperStream web pages.
Can I claim a tax deduction on the super I pay my staff?
Generally, you may claim a 100% tax deduction for super contributions made on behalf of your employees.
We hope this article has helped you understand the basics of your super obligations and how to comply. More detailed information is available on the Superannuation section of the business.gov.au website.
Things you should know
* Super Guarantee contributions can also be made to a fund specified under a workplace determination or an enterprise agreement if the determination was made before 1 January 2021.
The article is prepared by BT Funds Management Limited ABN 63 002 916 458, AFSL Number 233724, RSE Licence No. L0001090 (BTFM) and BT Portfolio Services Ltd ABN 73095 055 208 AFSL 233715 (BTPS).
This article does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness, having regard to your personal objectives, financial situation and needs before acting on it.
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