What is Super Guarantee?

Super Guarantee (SG) was first introduced in 1992 and is the term for the mandatory super contributions employers must make on behalf of their eligible employees. It was introduced to ensure that all working Australians have adequate savings for their retirement.


You generally have to pay the Super Guarantee (SG) into a complying super fund for employees who are:

  • aged 18 or over and earn $450 or more before tax in salary or wages in a calendar month
  • aged under 18, earn $450 or more before tax in salary or wages in a calendar month and work more than 30 hours a week
  • contractors who are employed wholly or principally for their labour and paid for hours worked rather than to achieve a result. 


You need to pay super for employees who are temporary residents of Australia or are Australian residents working overseas and satisfy any of the above criteria.


If you run your business through a company, you also need to pay super for directors of the company who receive salary, wages or director’s fees.


You need to pay at least 9.5% (the current Super Guarantee rate) of your employee’s ordinary time earnings in super.

 

Ordinary time earnings (OTE) are generally the amount an employee earns for ordinary hours of work.  It includes payments like commissions, allowances and certain bonuses but excludes overtime.  You do not usually need to pay Super Guarantee (SG) on the amount of an employee’s OTE that is above the maximum super contribution base ($52,760 per quarter for 2017/18, indexed annually).

 

Some employees are covered by awards or employment agreements that require you to pay super above the SG rate (currently 9.5%).

 

For more information about your super obligations and OTE, visit ato.gov.au and search ‘employers super’.


You may not have to pay super for employees who are:

  • aged 18 or over and earn less than $450 before tax in a calendar month (you need to pay SG for any month the employee earns $450 or more)
  • under 18 and working 30 hours or less per week
  • non-residents completing work outside of Australia
  • on paid parental leave
  • receiving payments under the Community Development Employment Program.


For more information on which employees you need to pay super for, visit ato.gov.au and search ‘employers super’.


You need to pay at least 9.5% (the current Super Guarantee rate) of your employee’s ordinary time earnings in super.

 

An employee’s ordinary time earnings (OTE)* generally includes:

  • salary or wages paid for ordinary hours of work
  • bonuses such as performance related bonuses  or Christmas bonuses
  • leave payments such as annual leave, sick leave and long service leave
  • shift-loadings for casual employees
  • certain allowances such as danger allowance or retention allowance
  • certain termination payments made in lieu of notice.

 

Generally OTE does not include overtime payments unless there is a specific agreement between you and the employee.

 

You do not usually need to pay Super Guarantee (SG) on the amount of an employee’s OTE that is above the maximum super contribution base ($49,430 per quarter for 2014/15, indexed annually).

 

You may still choose to pay 9.5% on this amount however, it is not compulsory unless required under an agreement between you and the employee such as an employment contract or a salary sacrifice agreement.


You must pay the required SG contributions for your employees at least quarterly by the relevant cut-off date (shown in the table below).  You can choose to pay SG more regularly than this, such as fortnightly or monthly.

 

SG for OTE earned between: Must be paid by:
1 January and 31 March 28 April
1 April and 30 June 28 July
1 July and 30 September 28 October
1 October and 31 December 28 January

 

For more information about your SG obligations, visit ato.gov.au and search ‘employers super’.


If you don’t meet your SG obligations you will be required to lodge a Superannuation guarantee charge statement – quarterly form and pay a Superannuation Guarantee Charge (SGC) to the ATO.  You may also lose the tax deductions you would usually be able to claim for making super contributions.

 

You will generally have to pay the SGC if you:

  • don’t pay enough SG for your employee
  • don’t pay SG contributions by the quarterly cut-off date
  • don’t pay SG to your employee’s chosen super fund.

 

If you have paid SG contributions for your employees after the cut-off date you may be able to use the late payment as an offset to reduce the amount of SGC you have to pay.

 

For more information about your SG obligations, visit ato.gov.au and search ‘employers super’.


The SG rate is currently 9.5% and will remain at this rate until 30 June 2021. From 1 July 2021, the SG rate will increase to 10% and will continue to rise each financial year by 0.5% until it reaches 12% by 1 July 2025.

 

Period SG rate (%)
1 July 2014 – 30 June 2021 9.5
1 July 2021 – 30 June 2022 10
1 July 2022 – 30 June 2023 10.5
1 July 2023 – 30 June 2024 11
1 July 2024 – 30 June 2025 11.5
1 July 2025 onwards 12

Disclaimers and notes

* Ordinary time earnings (OTE) are generally the amount an employee earns for ordinary hours of work.  It includes payments like commissions, allowances and certain bonuses but excludes overtime.  You do not usually need to pay Super Guarantee (SG) on the amount of an employee’s OTE that is above the maximum super contribution base ($49,430 per quarter for 2014/15, indexed annually).

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