How to Pay your Employees Superannuation - Employers and Company Directors - This is for you.
The superannuation guarantee rules have tightened up over the last few years, so it's worth quick refresher on your obligations, whether you employ workers, work for yourself under a company or trust structure, or hire contract labourers.
If you are not an employer, but a sole trader, employee, investor, or other income earner, you may be able to doubly benefit by contributing to your own super and claiming a tax deduction. Get in touch with us if you would like to explore these options.
WHY
It's only fair to pay employees their entitlements in a timely manner, and there is no tax deduction until and unless super is paid on time and correctly.
If that's not enough for you to spring into action, you should know the ATO are far stricter and heavier on penalties for late or underpaid superannuation obligations than they have been in the past;
this can include where super is not paid to the correct nominated fund
the ATO charge administration fees per employee, per quarter
nominal interest (for lost fund earnings) of 10% per annum applies from the start of the relevant quarter (even if they only earned the super in the last week!)
additional penalties can be up to 200% of the missed super plus administration fees and interest
company directors can be pursued for the shortfall account personally
like all ATO debts, general interest will apply.
WHEN
Superannuation payments by employers need to be processed by the recipient superannuation fund within 28 days of the end of each quarter, as a minimum. It often makes good cashflow and administrative sense to pay super more often, in smaller amounts.
Note we suggest allowing a few days for money to transfer and the super funds to receive the contributions, as the date on the fund records is the "official" date of a contribution in any situation of doubt.
Super relating to payroll dates between | Due date for receipt by fund | Suggested latest payment date |
|---|---|---|
1 January - 31 March | 28 April | 19 April * |
1 April - 30 June | 28 July | 24 June ** 21 July |
1 July - 30 September | 28 October | 21 October |
1 October - 31 December | 28 January | 19 January * |
*April and January have public holidays that may delay processing.
**Contributions processed by 30 June will be tax deductible in the current year's return, so we encourage any top-up super or known guarantee amounts to be paid early.
WHO
All employees are now entitled to Superannuation Guarantee regardless of their hours or monthly earnings.
This includes adult casuals, and employees under 18 years of age working over 30 hours per week. This also includes people paid director fees, salary, allowances and wages.
Don't forget that contractors paid by the hour and principally for skills and labour are also caught by the super guarantee rules. This is a complex, case-by-case determination, so if in doubt, please get in touch.
WHAT AMOUNT
The rate of super guarantee is being progressively increased, partly in order to build the super balances faster and larger for Australian workers retiring in the future.
Financial Year Ending 30 June | Super Guarantee Rate^ |
2023 | 10.5% |
2024 | 11% |
2025 | 11.5% |
2026 and later | 12% |
The rate is applied to the gross, ordinary time earnings. This will include any bonuses, commissions, annual leave payments, most allowances, shift loadings and termination pay in lieu of notice.
WHERE
Employers are now required to use new workers' existing "stapled" super account if the employee does not nominate a fund. Chromatic can assist with identifying the stapled fund via the ATO if needed. Only once it is established the employee does not have an existing fund should the 'default' fund of the employer be used.
For several years now, SuperStream has been compulsory for bulk electronic reporting of contribution details to the recipient super funds - you may comply with this via your payroll software, a Clearing House or a messaging portal. Talk to us if you would like guidance on the best solution for you.
HOW
Most common accounting softwares make super compliance a lot easier than it may sound in this post!! The trick is in understanding your obligations and setting up the payroll module correctly for the employee arrangements and pay types in your business. Luckily, we can help with a quick settings double-check, or a thorough review and recalculation if needed.
Chromatic are here to help with any queries or uncertainty you may have in relation to your personal superannuation deductions and/or how to pay your employees superannuation obligations, past or present. Save yourself penalties and headaches by taking action and reaching out today.
^These rates apply for workers on mainland Australia - Norfolk Island residents or jobs are subject to transitional minimums until 30 June 2028.
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