Employers are required under law to contribute 10.5% of an employee’s earnings into super. Known as Superannuation Guarantee (SG), these contributions are usually part of your salary package.
Knowing the answers to questions like ‘when and how much super does an employer pay’, ‘what counts as Ordinary Time Earnings’ and ‘do you pay super on bonuses’ will give you an idea of how much goes into your superannuation every year.
How Much Super Does an Employer Have to Pay
The minimum super contribution made by your employer is also known as super guarantee or SG.
For the 2022/23 tax year the employer super contributions rate is 10.5% of ordinary time earnings. This means that your employer must pay at least 10.5% of your gross salary into your supper account on top of your wages.
So if you make $70,000, your employer will pay $7,350 ($70,000 times 10.5%) into your super account.
The SG rate went up this year from 10 to 10.5% and will continue to increase incrementally over the next three years.
Who Is Eligible for Super?
In general, anyone over 18 who is working at least 30 hours a week is entitled to receive superannuation payments by employers, including workers over the preservation age who are transitioning to retirement and have already accessed their super.
It also includes:
- Full or part-time and casual workers;
- Temporary residents;
- Company directors;
- Family members working in a family business;
- Employees under 18 years working over 30 hours a week;
- Contractors who are paid mainly by the hour.
Self-employed workers are not obligated to pay super for themselves. That said, it might be a good idea to make personal super contributions as a sole trader, giving you more savings when you retire.
What Earnings Is Super Paid On?
Superannuation is 10.5% of your Ordinary Time Earnings (OTE), which represent the gross amount employees earn for their ordinary hours of work and include:
- Casual employee shift loadings
- Piece rates when no ordinary hours of work are stated
- Commission
- Allowances, such as
- Unconditional extra payment
- Danger or site allowance
- Retention allowance
- Hourly on-call allowance for ordinary work hours for doctors
- Bonuses, including Christmas and performance bonus
- Annual, sick leave, long service leave and annual leave loading
- Termination payments in lieu of notice
If you are not sure whether your payment counts as an OTE, check the ATO’s full list.
- Unconditional extra payment
- Danger or site allowance
- Retention allowance
- Hourly on-call allowance for ordinary work hours for doctors
Do You Pay Superannuation on Bonuses and Overtime?
While super is paid on bonuses and commissions, overtime payments are excluded from OTE. In rare cases when the employer cannot distinguish between overtime and ordinary hours, overtime can be included in the OTE.
The same rule applies if your payments are calculated as an annualised or lump sum component of your total salary package. In this case, if overtime payments are not clearly defined they will count as OTE.
Maximum Employer Super Contributions
Also known as the Maximum Superannuation Contribution Base, this sum represents the maximum limit on an employee’s income on which the employer needs to pay SG contributions.
It is set annually by the Federal Government and for the 2022/23 financial year, it stands at $60,220 per quarter.
This means that the maximum SG amount an employer is required to pay is the equivalent of 10.5% of $60,220 per quarter, or $240,880 a year, which comes out to a contribution of $6,323.10 per quarter.
If an employee’s earnings are over the Maximum Superannuation Contribution Base, i.e. go over $60,220 a quarter, the employer does not have to make SG contributions on earnings above that sum.
Bear in mind that some industrial awards or workplace agreements might require employers to pay contributions on earning above the limit. Any additional super contribution made by employers at the request of an employee is considered a reportable superannuation contribution and is not included in the employees’ accessible income.
This covers salary sacrifice agreements and other additional employer contributions.
Note: Use the ATO’s calculator to work out how much super you are supposed to get from your employer.
When Is Super Due?
superannuation payments by employers must be made from the day you start your employment by the quarterly super due dates.
Payments can be made more frequently than once in three months, i.e. every month or two weeks, as long as the SG contribution for that period is paid by the quarterly deadline.
If the due date is on non-working days like weekends or holidays, the contribution must be transferred to the super fund on or before the following working day.
What Happens if You Miss a Payment?
Failing to make employer contributions on time and to the correct super fund means the employer will have to pay the Super Guarantee Charge (SGC) and lodge a statement to the ATO no later than a month after the super due date.
The SGC includes:
- Super Guarantee shortfall (super according to salary and wages with overtime and any liability capped at $500 based on the shortfall);
- 10% annual nominal interest (starting from the quarter of the missed payment);
- $20 administration fees per employee and quarter
Keep in mind that the SGC is not only higher than the super contribution, but it is not tax deductible either.
You can calculate your Super Guarantee Charge here.
Where Is Super Guarantee Paid?
Employers can pay super into the employee’s chosen or stapled super fund. If an employee has not chosen a super fund, employer contributions could be made to the employer’s default fund.
Employer super contributions are made electronically and reported via SuperStream and Single Touch Payroll.
Bottom Line
Being familiar with how much super an employer needs to pay is a must for both employers and workers. For the former, this information ensures they are adhering to legal obligations and contributing to your employee’s retirement on time.
For workers, knowing how much money goes into your super every quarter will show you if your superannuation is on track and whether you have enough in your super balance to lead a comfortable life in retirement.
1. What does your employer need to know to contribute to your super fund?
When making contributions, your employer will need to know the name of your super fund, their ABN and Unique Superannuation Identifier (USI) and your super fund member number. In addition, both your employer and your super fund will need your tax file number (TFN).
2. How can I check if I have been paid super?
The amount set aside for your superannuation should be listed on your payslip, although you should log into your super account regularly and check transactions to ensure that you are getting the right amount of money.
3. What do I do if my employer hasn’t paid my super?
First, check your super account to verify that payments have not been made. If that is the case, use the ATO’s Report Unpaid Super Contributions From My Employer tool to file a report and they will investigate the case.
4. How long does it take for super to be paid into your account?
The transfer of the contribution to your super depends on your superannuation fund rather than how much an employer continues to your account. Generally speaking, the money should be in your account within 10 business days.
