Reading time: In simple terms, the Superannuation Guarantee requires that the minimum super an employer needs to pay an employee is 11.5% of that employee’s gross salary. This rate will increase to 12% on 1 July 2025. However, it’s often more complex than that, as Ordinary Time Earnings must be used in calculations when working out the minimum amount of super payable.
Tips - avoiding calculation mistakes
1. Know which employees are due super
Employees are to be paid super when:
a) They are over 18 years of age
or
b) They are under 18 years of age and work 30 hours per week or more.
It doesn’t matter if these staff members are employed on a full-time, part-time or casual basis. If they fit the above criteria, you need to pay super on their behalf. In fact, the ATO may also regard some contractors as eligible employees for superannuation purposes.
The ATO has a handy decision tool to help you work out whether an employee is eligible for super.
2. Understand the total package
Currently, the amount of super due for each employee is 11.5% of their Ordinary Time Earnings. This is not always an employee’s total salary package. It generally includes base salary or wages, leave entitlements, some allowances and commissions, but usually, not overtime. Make sure your software is current and set-up to manage the ATO’s one touch payroll system.
3. Pay by the due dates
Paying monthly or at each pay cycle is often the safest way to ensure you are paying super on time.
Some businesses may be allowed to pay quarterly, if stipulated in an award or agreement, but there are still due dates to pay this.
If you are late or you miss a payment, there are substantial fines that can be imposed by the ATO known as the Super Guarantee Charge. This is paid on top of any outstanding super, and is not tax deductible.
4. Keep up-to-date, accurate and straightforward records
By law, businesses must maintain accurate, easily accessible superannuation payment records that show:
- Who was paid super
- How much super was paid to each employee
- How that super was calculated
These records must be kept for five years and be in English or be easily translated.
5. Calculate salary sacrifice correctly
If an employee salary sacrifices, then the super is calculated from their salary before the salary sacrifice amount is deducted.
6. Make sure you provide TFNs to super funds
If an employee’s Tax File Number (TFN) is not provided to their super fund, that employee may end up paying extra tax on their super. Therefore, it is important that you pass on the TFN to the chosen super fund as soon as possible – usually with the first contribution, or within 14 days of receiving it.
A Tax File Number is personal data and should be treated confidentially.
7. Understand Ordinary Time Earnings
Check out the OTE page for more tips on how to avoid common mistakes.
Is superannuation paid on holiday leave loading?
Leave loading is not included in calculations where the loading is to make up for a loss of opportunity to work overtime. On the other hand if it can be shown that the loading has no relationship to overtime, then super is payable on it. A nice clear employment agreement really helps.
Still unsure?
The Australian Tax Office can help you understand your Superannuation Guarantee obligations at ato.gov.au.