Superannuation guarantee
As an employer you must provide a minimum level of superannuation support for your eligible employees – currently 9% of an employee’s earnings base (generally an employees’s ordinary time earnings [OTE]).
Who is an employee?
Most employees, whether full-time, part-time or casual, a company director or certain independent contractors.
An employee is a person who is paid for working under your control and direction under a contract of employment. This contract can be written or oral. In addition, employees include independent contractors to whom you have entered into a contract for his or her personal labour even if an ABN is quoted.
Exceptions include employees who are:
- paid less than $450 (before tax) in any calendar month (superannuation does not have to provided in respect of that month)
- aged 70 years and over
- non-resident employees who are paid solely for work undertaken outside Australia, or
- under 18 years old and employed part-time (that is, employed to work for no more than 30 hours per week).
What is an employee’s earnings base?
An employee’s earnings base is the dollar amount to which you apply your charge percentage to calculate the minimum superannuation support for that employee.
If a particular employee has no other acceptable earnings base, then the employee’s ordinary time earnings, as defined in the superannuation guarantee legislation will be the default earnings base.
What are ordinary time earnings?
Ordinary time earnings (OTE) are the total of the employee’s earnings for ordinary hours of work, over-award payments, shift loading and commission.
See the table below to determine whether the earnings is included as part of salary or wages and OTE.
What are salary or wages?
As well as their ordinary meaning, salary or wages include:
- the money you pay to someone for work and services,
- commissions,
- directors’ fees,
- most allowances, and
- the labour portion of a payment made to a person who works under a contract principally for his or her labour.
It does not include payments which are principally of a private or domestic nature to someone who works
for you for no more than 30 hours a week. Nor does it include fringe benefits, reimbursements or dividends.
See the table below for more information.
| Payment type |
Salary & Wage |
OTE* |
| Most allowances (other than reimbursement of expenses) |
Yes |
Yes |
| Reimbursement of expenses e.g. travel costs |
No |
No |
| Bonuses not relating to specific performance criteria e.g. Christmas bonus |
Yes |
No |
| Other Bonuses |
Yes |
Yes |
| Commission |
Yes |
Yes |
| Over award payments |
Yes |
Yes |
| Shift loading |
Yes |
Yes |
| Overtime |
Yes |
No |
| Casual loading |
Yes |
Yes |
| Benefits subject to fringe benefits tax |
No |
No |
| Workers compensation payments, including top-up payments, where NO work is performed |
No |
No |
| Workers compensation payments, including top-up payments where work is performed |
Yes |
Yes |
| Top-up payments . serving jury duty or reserve forces etc. |
Yes |
No |
| Payments when on maternity or paternity leave |
Yes |
No |
| Pay for annual holiday leave taken |
Yes |
Yes |
| Government (wage) subsidies e.g. job start allowance |
Yes |
Yes |
| Annual leave loading |
Yes |
No |
| Pay for sick leave taken |
Yes |
Yes |
| Pay for long service leave taken |
Yes |
Yes |
| Accrued annual leave, long service and sick leave paid as a lump sum on termination. |
Yes |
No |
| Payments in lieu of notice |
Yes |
No |
| Redundancy payments |
Yes |
No |
| Other payments made by employer on termination |
Yes |
No |
| Directors fees |
Yes |
Yes |
| Payments for performances in, or provision of services relating to entertainment, sport, promotions, films, discs, tapes, TV or radio |
Yes |
Yes |
| Payments to a contractor who is an employee under the SGAA (labour portion only) |
Yes |
Yes |
| Dividends |
No |
No |
| Partnership and trust dividends |
No |
No |
| Payments for entering into a restraint of trade agreement |
No |
No |
| Payments for domestic work under 30 hours per week |
No |
No |
*Ordinary Time Earnings as defined in the superannuation guarantee legislation
Superannuation quarters and due dates?
| Superannuation guarantee quarter |
Due date for payment of superannuation guarantee |
If late? Due date for lodgment of statement and payment of superannuation guarantee charge |
| 1 July – 30 September |
28 October |
28 November |
| 1 October – 31 December |
28 January |
28 February |
| 1 January – 31 March |
28 April |
28 May |
| 1 April – 30 June |
28 July |
28 August |
What if you pay late?
If you don’t pay the minimum level of superannuation support for your employees by the quarterly cut-off date, you must lodge a Superannuation guarantee statement and pay the superannuation guarantee charge to the ATO. The charge includes the shortfall between what you should have paid and what you actually paid, and administration and interest components.
If you make sufficient superannuation contributions for your eligible employees by the relevant due dates, those contributions are generally tax deductible.
If you don’t pay the superannuation guarantee by the quarterly cut-off date, that quarter’s superannuation guarantee (and admin fee and interest) are not tax deductible.
For high income earners - Maximum earnings base
The maximum earnings base is used to determine the maximum limit on any individual employee's earnings base for each quarter of any financial year. You do not have to provide the minimum support for the part of earnings above this limit.
| Income year |
Per quarter |
| 2010–11 |
$42,220 |
|
