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Superannuation is one of those topics that every Australian business owner needs to get right – not just to support your team’s financial future, but also to protect your company from fines and even legal action. Superannuation payments in Australia can seem complicated at first, but with the right knowledge and systems in place, it’s manageable and will give you peace of mind.
If you’re starting out with your first employees, navigating changes to super rates, or just want to ensure your payroll is legally airtight, this guide is for you. We’ll break down what you actually need to pay and when, discuss common employer mistakes, and outline the best steps to keep your business compliant.
Keep reading to understand the key superannuation requirements for Australian employers – and how we can help you meet them with confidence.
What Is Superannuation And Why Does It Matter?
Superannuation (super) is a compulsory savings system in Australia designed to provide income for employees in retirement. From the moment you hire staff, you take on a legal obligation to pay a minimum percentage of their ordinary time earnings into a registered super fund.
Getting super right is crucial – late or missed payments can trigger serious penalties and interest charges from the Australian Taxation Office (ATO). Persistent non-compliance may even lead to criminal prosecution in the most serious cases.
But it’s more than just avoiding penalties: proper payment of super shows your integrity as an employer, supports staff retention, and keeps your business reputation strong.
Is Super Taken Out Of Your Employees’ Pay?
This is one of the most common questions we receive at Sprintlaw: “Is super taken out of my employee’s take-home pay, or is it paid on top?”
In most cases, superannuation is paid on top of an employee’s base wage or salary. This means:
- If you offer an annual salary of $60,000 (plus super), you pay the employee $60,000, and super is an additional amount – calculated as a percentage of that salary.
- If your employment contract says $60,000 “inclusive of super”, the super amount is taken out of that total figure, so their take-home is lower.
It’s vital to word your employment contracts clearly so there’s no confusion for your team about how their super works.
What Are The Superannuation Payment Rules In Australia?
Superannuation payment rules are set by the federal government and administered by the ATO. Here’s what you need to know as an employer:
Super Guarantee (SG) Rate
The Super Guarantee requires employers to contribute a mandated percentage of employees’ ordinary time earnings to their chosen super fund. The SG rate is legislated to rise over time – for the 2023-24 financial year, it’s 11%, increasing to 11.5% from 1 July 2024, and 12% from July 2025.
Who Must Receive Super?
- All part-time, full-time, and most casual employees over 18 – regardless of how much they earn
- Under-18s who work more than 30 hours a week
- Some contractors if the contract is “principally for labour” (so, if you engage them directly and they’re paid mainly for their personal work/skills)
For more guidance, see Sprintlaw’s guide on employee vs contractor distinctions.
Ordinary Time Earnings (OTE)
Super is paid on your employee’s ordinary time earnings – this includes salary, wages, most commissions, shift loadings, and some allowances, but excludes overtime.
When Must Super Be Paid?
Super must be paid at least quarterly, although many employers pay monthly to keep payroll simple and employees happy. The payment deadlines are:
- 1 July – 30 September: Payment due by 28 October
- 1 October – 31 December: Payment due by 28 January
- 1 January – 31 March: Payment due by 28 April
- 1 April – 30 June: Payment due by 28 July
Missing these deadlines attracts the Superannuation Guarantee Charge (SGC), which is costly and not tax-deductible.
How Are Superannuation Payments Made?
Payments must be made via an approved clearing house (like the ATO’s Small Business Superannuation Clearing House) and into complying super funds with verified details for each employee.
It’s crucial to get super fund details and employee choices right at the start of employment, so your onboarding process should include a clearly documented onboarding checklist.
Superannuation Requirements For Australian Employers
Superannuation requirements in Australia can sometimes catch businesses off guard, especially if you’re just starting out or expanding your team for the first time. Here’s an overview of what you must do to ensure compliance:
- Offer a Choice of Fund: Every new employee must be offered a standard choice form so they can pick their preferred fund. If they don’t choose, you must check with the ATO for a “stapled super fund”.
- Pay On Time & In Full: Super must be paid by the quarterly deadlines and at the correct rate. Underpaying or late payments mean not only interest and administration fees, but your business may lose the right to claim tax deductions on those amounts.
- Keep Records: You must keep accurate records for each employee, including their TFN, fund details, payment amounts, and receipts for at least five years.
- Notify Employees: Employees should receive regular payslips and an annual payment summary (if applicable) showing their super contributions clearly.
- Monitor Changes: Super rates change over time, and so do ATO rules. Stay up to date to avoid underpaying, especially at the beginning of a new financial year.
For a more comprehensive overview of key legal requirements and common mistakes small businesses make, see our guide: 10 Small Business Mistakes (And How To Avoid Them).
Common Superannuation Mistakes (And How To Avoid Them)
Many well-meaning employers fall afoul of superannuation law without realising it. Here are some of the key traps:
- Incorrect Definition of Employees: Misclassifying someone as a contractor when they should be deemed an employee for super purposes. If in doubt, review the contract or speak with a legal expert.
- Lumping Super Into Ordinary Pay: Including super in a stated salary without making it clear whether it’s “plus super” or “inclusive of super” (which changes the calculations).
- Missing Payments: Forgetting quarterly due dates, especially if you have irregular payroll runs around holidays, EOFY, or business changes.
- Using the Wrong Earning Basis: Calculating super on total pay (including reimbursements or overtime) or missing certain allowances. Only apply super to ordinary time earnings.
- Not Keeping Accurate Records: Inadequate documentation of super payments, employee choices, and fund confirmations.
Being proactive with your systems – using reputable accounting software, integrating onboarding checklists, and clearly documenting everything from day one – will set you up for ongoing compliance.
What Are The Legal Risks If Superannuation Rules Aren’t Followed?
Putting off super or getting it wrong can have serious legal consequences. Here’s what’s at stake for business owners:
- Superannuation Guarantee Charge (SGC): This is a penalty system the ATO enforces for late or underpaid super. It includes unpaid super, interest, and an admin fee per employee, plus these amounts are not tax-deductible.
- Direct Legal Action: Employees can take action (through the Fair Work Ombudsman or directly via courts) for unpaid super, which could mean paying arrears plus further penalties.
- Director’s Personal Liability: Company directors can sometimes be held personally responsible for unpaid super, even if the business ceases trading or goes insolvent. This is another reason to keep Director indemnity protections in place – for more on this, see our article on company director personal liability.
- Public Reputational Risk: The ATO now “names and shames” businesses that chronically fail to meet their super obligations.
The best approach is to see super payments as a non-negotiable business expense and to automate payments wherever possible.
What Legal Documents And Systems Can Help Ensure Super Compliance?
Getting the paperwork and processes right from day one is the surest way to protect your business.
- Employment Contract: Clearly specify wages, superannuation entitlements, and the calculation basis (“plus super” or “inclusive of super”) to prevent misunderstandings. See our employment contract sample guide for help.
- Onboarding Checklist: Collect TFN, choice of super fund, and all other payment information during initial onboarding. See our checklist in the employee onboarding guide.
- Payslip Template & Payroll System: Use a system that automatically calculates and records super, generates compliant payslips, and sets reminders for deadlines.
- Employee Handbook: Outline entitlements and compliance expectations in your workplace policy manual. Our Workplace Policy and Staff Handbook Guide is a good place to start.
- Access to Legal Advice: Reach out for legal support if you’re unsure how super laws apply to a particular worker or if you’re setting up a new employment structure (such as incentivising contractors or launching an Employee Share Scheme).
What Else Do I Need To Know About Superannuation Payment Compliance?
Single Touch Payroll (STP) Reporting
Since 2019, most Australian businesses must use Single Touch Payroll (STP) to digitally report wages, tax, and super every time they pay their staff. This links payroll software directly to the ATO, making super compliance easier to monitor (and enforce).
Industry-Specific Superannuation Rules
Some industries (like construction, cleaning, and hospitality) may have special requirements or recommended default super funds under relevant awards or enterprise agreements. Double-check award coverage and obligations for your field. If you’re unsure, our employment law experts can help clarify your employer obligations.
Review Superannuation Regularly
Superannuation laws and minimum rates shift over time. For example, the scheduled increase to 11.5% and then 12% over the coming years. It’s a good practice to:
- Set payroll calendar reminders before the start of each financial year
- Sign up for ATO employer update emails
- Schedule a regular payroll health check, especially after key changes in your business structure or workforce
What About Contractors And Superannuation?
Super obligations don’t only apply to employees. Some contractors might also be eligible for compulsory super – even if you have a written contractor agreement. If the contract is mainly for their labour and the contractor does not delegate the work, you may be required to pay super.
For more on ensuring your contracts align with current super requirements, see our in-depth comparison of contractors and employees.
Do I Need Super For Myself As A Business Owner?
If you’re a sole trader or a partner in a partnership, you’re not usually required by law to pay yourself super – but it’s highly encouraged to make voluntary contributions for your own retirement.
Company directors and owner-employees are generally entitled to super just like ordinary employees when they draw a wage from the business.
Key Takeaways: Employer’s Guide To Superannuation Payments Australia
- Superannuation is a legal requirement in Australia – employers must pay the minimum Super Guarantee (currently 11%) on your staff’s ordinary time earnings.
- Super is paid on top of your employees’ usual wages, unless you specify “inclusive of super” in their contract (make your contracts clear to avoid disputes).
- Payments must be made at least quarterly and through an approved clearing house, with strong record-keeping and reporting.
- Getting super payments wrong can lead to penalties, legal action, and reputational damage – but simple systems and clearly defined contracts will protect your business.
- It’s essential to stay up to date with super law changes, award rules, and payroll systems – and seek legal support if you’re unsure about your obligations.
If you would like a consultation on handling superannuation payments for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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