Sapna is a content writer at Sprintlaw. She has completed a Bachelor of Laws with a Bachelor of Arts. Since graduating, she has worked primarily in the field of legal research and writing, and now helps Sprintlaw assist small businesses.
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On 1 July 2025, the Superannuation Guarantee (SG) rate officially increased to 12%. This was the final step in a long-term plan to strengthen Australians’ retirement savings. While employees will benefit from more money going into their super, employers have been left with bigger responsibilities - from calculating contributions correctly to meeting strict payment deadlines.
So, what does this mean for your business? And what else do employers need to stay on top of when it comes to super?
What Changed in July 2025
The SG rate rose from 11.5% to 12%. This means employers must now contribute 12% of an employee’s ordinary time earnings (OTE) into their nominated super fund. There are no further increases scheduled, so this 12% rate will be the standard moving forward.
What It Means in Real Numbers
For someone earning $80,000 in OTE per year, super contributions jumped from $9,200 (at 11.5%) to $9,600 (at 12%). That’s an extra $400 per year. While it might not seem like much, over 20 or 30 years of compounding, that difference could amount to tens of thousands of extra retirement savings.
Employer Duties Under Superannuation Law
Employers have more obligations than just paying the right percentage. To stay compliant, you must:
Pay super for eligible workers
This includes full-time, part-time, and most casual employees, as well as some contractors. Even if a worker has an ABN, if they’re essentially being paid for their labour, super is still required.
Example: A marketing agency hires a designer on a contract. Because the work is primarily labour (and not the operation of a business), the agency must pay super.
Pay on time
Super must be paid at least quarterly. From July 2026, payday super will mean contributions are due at the same time as wages.
Example: A café pays wages every fortnight but leaves super to the end of the quarter. Once payday super begins, it will need to process super fortnightly instead.
Pay to the correct fund
Employees are entitled to choose their fund. If they don’t, you must pay into a valid default fund with a registered MySuper product.
Use Single Touch Payroll (STP)
All super contributions need to be reported through STP-enabled software. This ensures transparency with the ATO.
Keep accurate records
Employers must keep clear records of calculations, contributions, and payment confirmations for at least five years.
Why It Matters for Employers
The ATO takes super obligations seriously. Late or missing payments can lead to the Super Guarantee Charge (SGC), which is more expensive than paying super correctly in the first place because it adds interest and admin fees. And unlike normal super contributions, the SGC isn’t tax deductible.
In other words: it costs less to get it right the first time.
What’s Next for Super
- Payday super (from July 2026): Super will need to be paid at the same time as wages.
- Transfer Balance Cap: Increased to $2 million from July 2025.
- Paid Parental Leave super: Super contributions at 12% are now being added to government-funded Paid Parental Leave.
While there is political discussion about whether super should rise further in the long-term (e.g., to 15%), the current government has confirmed that 12% is the final step - at least for now.
Common Mistakes to Avoid
Even with the best intentions, employers often trip up on super. Here are some of the most common mistakes - and how to avoid them:
- Paying late: Missing the deadline by even a few days can trigger the SGC. Aligning super with payroll runs is the best way to stay on track.
- Misclassifying workers: Assuming contractors don’t need super is risky. If they’re working mainly for their labour, you probably need to pay it.
- Using the wrong fund: Failing to provide choice forms or paying into an outdated default fund may put you in breach.
- Forgetting allowances and loadings: Many allowances (like shift loadings and certain bonuses) count as OTE. Missing them means underpayment.
- Poor record keeping: Without proof of payment, you risk penalties and disputes even if you did pay.
Employer Checklist
Here’s a quick to-do list to make sure your business is on track with the 12% super changes:
- Update payroll systems to calculate SG at 12% from 1 July 2025.
- Check contracts to clarify whether salaries are “plus super” or “inclusive of super.”
- Pay on time - at least quarterly for now, and prepare for payday super in July 2026.
- Confirm employee fund details and provide choice forms to new hires.
- Keep records of all calculations, payments, and fund details for at least five years.
- Communicate with staff so they understand how the increase affects their super contributions.
- Plan for cashflow to cover the higher payroll costs, especially in small businesses.
The Bottom Line
The increase to 12% SG in July 2025 was a milestone for Australia’s retirement savings system. Employees now have more being invested for their future, while employers face higher costs and closer scrutiny from the ATO.
By understanding your duties, avoiding common mistakes, and following the checklist above, you’ll not only stay compliant but also build trust with your team. And if you’re unsure, now is the time to get expert advice - because when it comes to super, getting it wrong is always more expensive than getting it right.
If you would like a consultation on your employer duties, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
Sapna Goundancontent writer
