Paying super: Everything you need to know as an employer
When it comes to paying super, there can be conflicting and outdated information out there – and a simple google search may be even more confusing.
As a business owner with employees, you must pay super contributions for your eligible employees into a complying fund or retirement savings account.
If you don’t, you risk being charged with what’s known as the “super guarantee charge” and there could be other penalties as well.
In this blog, you’ll learn everything you need to know about paying super as an employer.
Paying super: Did you know?
- In some cases, you may have to pay super for contractors with an ABN and workers under 18.
- As of July 1, 2022, you now need to pay super to eligible employees regardless of how much they are paid each month.
- Super needs to be paid to employees who are casual, part time or full time, and if they are temporary residents.
A lot has changed with paying super in recent times, and it’s important to stay up to date and make sure you are complying with the ATO – and that’s where the team at Accounts All Sorted can help.
Superannuation rate: How much super do you need to pay?
The ATO states on its website that the “minimum superannuation you must pay for each eligible employee is 10.5 per cent of their ordinary time earnings (OTE). However, it’s scheduled to progressively increase to 12 per cent by 2025. This compulsory payment is called the super guarantee (SG) and is paid at least quarterly.”
You may also need to pay super for overtime and back pay.
However, the super contributions you make for your employees are tax deductible, but you can only claim the deduction in the same financial year that payments are made.
If you are in doubt, please get in touch with the team at Accounts All Sorted so we can have a conversation about your specific business and situation. Link to contact us page
Quarterly super payment due dates
While you can pay super contributions more frequently, generally an employer would pay their employees’ super quarterly, and before the due date.
| Quarter | Period | Payment due date |
| 1 | 1 July – 30 September | 28 October |
| 2 | 1 October – 31 December | 28 January |
| 3 | 1 January – 31 March | 28 April |
| 4 | 1 April – 30 June | 28 July |
Penalties for not paying super
Here’s what can happen if you don’t pay your super contributions on time:
- Super guarantee charge: You will have to pay the super guarantee charge and you will need to complete super charge statements. The superannuation charge generally comprises the interest on the amount and an administration fee.
- No tax deductions: You won’t be able to claim the super contribution for that quarter as a tax deduction if your super contributions are not paid on time.
- Super on overtime: You may have to pay super on ordinary time earnings and overtime for eligible employees.
- Director penalties: There can be director penalties, which can be equal to the unpaid amount.
- Fees and interest: You are liable for admin fees and interest, which increases from the date your super is due until the date you pay it in full. The fees and interest are tax-deductible in the year you incur it.
Other penalties can be incurred for not paying into a complying super fund; failing to keep adequate records; and not providing your employee’s tax file number to the super fund.
We can’t stress enough how important it is to pay your employee super contributions on time and make sure you comply with the ATO to avoid fines and penalties, which may be detrimental to your business.
What to do if you can’t pay your super on time
FACT: Your super contributions are only considered “paid” on the date that they are received by the super fund.
If you are late in paying or pay into a non-complying fund you will need to lodge a superannuation guarantee charge statement and pay the associated charges.
If you can’t pay your super, contact us to discuss your options.
How to pay employee super each quarter
Xero is a useful platform when it comes to paying super because of its Single Touch Payroll capabilities.
What is Single Touch Payroll? The ATO states: “Single Touch Payroll (STP) is an Australian Government initiative to reduce employers’ reporting burdens to government agencies. With STP, you report employees’ payroll information to us each time you pay them through STP-enabled software. Payroll information includes salaries and wages.”
Xero has STP-enabled software and makes it easier for employers to report to the ATO confidently and easily. If you need more support with Single Touch Payroll, a registered tax or BAS agent will be able to help you.
Complying with contributing super funds
As mentioned, it’s really important that you pay your super guarantee contributions to the right super fund account, otherwise there can be extra penalties.
As an employer, it’s your responsibility to make sure that an employee’s super fund complies with the ATO’s guidelines.
You must pay super contributions to your eligible employee’s chosen fund if they nominate a fund. An employee will generally tell you their choice of fund by completing a standard choice form. If they don’t nominate a fund, you can pay into an employer-nominated fund.
Employer super contributions: Get help today
In Australia, almost all employees are now entitled to a superannuation contribution paid by their employer into their nominated super fund.
If you have specific questions about paying super or need help setting up Single Touch Payroll, please contact Accounts All Sorted. We are always on hand and happy to help – contact us.
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