A Complete Guide to Paying Superannuation
23 Jan 2025
As a small business owner, understanding superannuation (or super) is crucial to staying compliant and ensuring your employees' financial well-being. Managing super may seem complex, but with the right knowledge, you can streamline the process and avoid costly penalties.
In this guide, we’ll break down everything you need to know about paying super for your employees, covering key aspects, deadlines, and best practices.
What is Superannuation and Why is it Important?
Superannuation is a compulsory system in Australia where employers contribute a percentage of their employees’ earnings to a retirement savings fund. This ensures that employees have financial support when they retire. For small businesses, timely and accurate super payments are essential to avoid fines and maintain employee trust.
Key Benefits of Superannuation:
Secures employees' futures.
Reduces turnover by fostering employee loyalty.
Demonstrates your commitment to workforce well-being.
Employer Obligations – Understanding the Basics
Employers must pay super contributions to all eligible employees. The minimum contribution rate (known as the Superannuation Guarantee) is currently 11% of an employee’s ordinary time earnings (OTE). This rate is set to increase gradually in the coming years.
Who is Eligible for Super?
You must pay super for:
Employees aged 18 or over (regardless of earnings).
Employees under 18 who work over 30 hours per week.
Casual, part-time, and full-time workers.
Exemptions:
Independent contractors (unless deemed employees for super purposes).
Employees earning less than $450 per month (this threshold was removed on 1 July 2022).
How to Calculate Super Payments
Super is calculated as a percentage of an employee's ordinary time earnings. OTE typically includes:
Regular wages/salary
Commissions
Shift loadings
Allowances (but not overtime)
Example Calculation:
If an employee earns $5,000 per month, the super contribution is calculated as: $5,000 x 11% = $550
Payment Deadlines and Reporting
Quarterly Due Dates:
Super contributions must be made at least quarterly by the following deadlines:
Late payments can result in the Superannuation Guarantee Charge (SGC), including penalties and interest.
How to Pay Super
You can make super payments through:
Superannuation Clearing House (recommended for multiple employees).
Direct payments to the employee’s nominated super fund.
Small Business Superannuation Clearing House (SBSCH) – a free ATO service.
Ensure your payment system meets SuperStream standards, which require electronic data and payment transmission.
Record Keeping and Compliance
You must keep records of:
Payment receipts and dates.
Employee fund details.
Calculation methods.
Contribution amounts.
Records must be retained for 5 years to ensure ATO compliance.