Superannuation Guarantee

Employers must pay superannuation into a complying superannuation fund or retirement saving account (RSA) for their eligible employees. These payments are called superannuation guarantee payments or employer contributions.

Eligibility

Employers must pay superannuation for each employee who is aged 18 years or over and paid the minimum monthly earnings threshold or more ($450 in salary or wages before tax in a calendar month). See Superannuation Rates and Thresholds. Employees under 18 are eligible for compulsory superannuation guarantee if they work 30 hours or more a week. Other employees may also be eligible if they work under a Labour Hire contract.

Important: Eligibility for superannuation guarantee is based on an employee earning salary or wages above a minimum of $450 a month (inclusive). However, superannuation contributions are calculated as a minimum of 9.5% of Ordinary Time Earnings (OTE). OTE is also used to determine whether the employee has exceeded the quarterly maximum earnings threshold.

Employees who may not be eligible for compulsory superannuation guarantee are:

1. Paid to do work of a private or domestic nature for 30 hours or less each week.
2. A non-resident employee paid to do work outside Australia.
3. A member of the Army, Navy or Air Force Reserve.
4. A foreign executive holding a specific class of visa or entry permit.
5. Temporarily working in Australia for an overseas employer and are covered by a bilateral social security agreement.

Contributions

Employers must pay the minimum superannuation guarantee amount set by the ATO (9.5% in 2014-2015) of an employee's Ordinary Time Earnings (OTE). See Ordinary Time Earnings Allowances. Most employees have ordinary time earnings as their earnings base. However, some may have another earnings base contained in:

• an industrial award
• an existing agreement they have with their employer
• a fund's trust deed
• a law of the Commonwealth, states or territories.

If you use the earnings bases from these other sources to calculate your minimum superannuation guarantee contributions, then they must be equal to or greater than the legislative minimums.

Important: If you have been using a different earnings base and paid superannuation guarantee of less than minimum SG amount of ordinary time earnings, you must increase this amount to meet the minimum requirements and avoid the superannuation guarantee charge (SGC). The superannuation guarantee charge is a charge you have to pay if you do not meet your superannuation obligations.

Further Reading

For more information on employer superannuation guarantee obligations, see:

• Guide to superannuation for employers http://www.ato.gov.au/Business/Employers-super/
• Super – what employers need to know (NAT 71038) http://www.ato.gov.au/Print-publications/Super---what-employers-need-to-know/
• Choice of super fund – meeting your obligations http://www.ato.gov.au/Business/Employers-super/In-detail/Choice-of-super-fund/Choice-of-super-fund---meeting-your-obligations/

Topic: 14506