Employers have an obligation to pay superannuation to eligible workers – not paying super guarantee (SG) can result in penalties and loss of tax incentives such as tax deductions.
Employees who earn $450 or more before tax in a calendar month are entitled to super guarantee (SG). Contract workers and employees under 18 have special conditions. Some contractors may still be eligible for SG, even if they have their own ABN.
Super guarantee requires employers to pay a minimum 9.5 per cent of ordinary time earnings (OTE). It is important for employers to check awards as some have a higher rate and different conditions.
Super contributions are tax deductible if payments are made to an employee’s super fund in the financial year they are paid. Super contributions are considered paid when they are received by the fund.
The deadlines are quarterly for most funds, i.e. 28 July, 28 October, 28 January, 28 April. However, some funds require monthly payments, so it is important to check with each fund.
Employers are required to keep records for five years showing how much SG was paid and how it was calculated. Records must also show you offered each employee a choice of super fund.
Failing to comply and/or deliberately doing the wrong thing can result in penalties for employers.