“Plans are nothing; planning is everything.” – Dwight D. Eisenhower
Running a business in Australia often feels like navigating a labyrinth.
You’re managing cash flow, hiring great staff, and keeping customers happy. But there’s one non-negotiable task you can’t afford to overlook: superannuation contributions for your employees.
It’s a legal requirement and a critical part of building trust with your team.
Think of super contributions as checkpoints on your business journey. Miss one, and you risk falling into the pit of penalties and fines. But hit your marks, and you can sail through with happy employees and a compliant business.
Let’s explore this in plain terms, from the basics to the finer details, so you can feel confident knowing your business is on track.
Need a quick way to stay on track? Download our Free Employer Super Checklist today and simplify your obligations.
Employer Contributions to Superannuation: Your Legal Compass
If your employees were a ship’s crew, superannuation contributions would be your promise to their future. Legally, you’re required to pay a percentage of their earnings into their super funds under the superannuation guarantee (SG).
Super at a Glance:
- The Current SG Rate: As of July 2024, you need to contribute 11.5% of each employee’s ordinary time earnings (OTE). This will increase to 12% from 1 July 2025.
- Who’s Eligible? Full-time, part-time, and casual workers. Earnings amount is not relevant – prior to 1 July 2022, you did not have to pay super guarantee for a worker earning less than $450 a month. You now have to pay super regardless of their earnings.
- Due Dates Matter: Super must be paid at least quarterly to avoid penalties. Use the ATO’s clearing house or payroll software to stay on time.
Understanding Ordinary Time Earnings (OTE): It’s Not Overtime
Ordinary time earnings (OTE) are the foundation for calculating your super obligations. It’s what employees earn for their ordinary hours of work, excluding extras like overtime.
What Counts as OTE?
- Base salary or wages
- Bonuses and commissions
- Shift loadings and paid leave
What Doesn’t Count?
- Overtime payments (provided the employee’s ordinary hours of work are clearly identified, otherwise they may be included).
Think of OTE as the dependable base income. It’s what you work from when you calculate the minimum amount you must contribute.
To learn more, visit the ATO guide on OTE calculations.
Pay Super Contributions: Paying It Forward
When it comes to making super contributions, timing and accuracy are everything.
- Work Out the Numbers: Multiply your employee’s OTE by the current SG rate (11.5%). If Alex earns $5,000 in OTE per month, your contribution is:
$5,000 × 11.5% = $575. - Meet Deadlines: Super is due quarterly (by 28 days following the end of the quarter).missing a due date can cost you. Late payments mean penalties and missed tax deductions. *See the paragraph below, “Payday Super,” to prepare for changes coming in July 2026.
- Pay Super Through SuperStream: Use compliant software to ensure payments and data flow directly to employee funds.
Salary Sacrifice: The Treasure Trove for Employees
Salary sacrifice is when employees voluntarily contribute part of their pre-tax income to their super accounts. While this doesn’t replace your SG obligations, it’s a great way to help them save more while enjoying tax benefits.
Here’s the trick: Document salary sacrifice arrangements carefully to ensure compliance with super laws and avoid complications during tax time.
The Super Guarantee (SG): Your North Star
The super guarantee isn’t just about compliance – it’s about doing the right thing. Every time you make a super contribution, you’re investing in your employees’ futures.
But miss a payment, and you’ll face the Superannuation Guarantee Charge (SGC), which includes:
- The unpaid super amount
- Interest on the shortfall
- An administration fee
Plus, late contributions aren’t tax-deductible, meaning you’ll pay twice for the same mistake.
Navigating the Tax Terrain
Speaking of tax, here’s the good news: Your super contributions are generally tax-deductible, provided you pay them on time. This makes super not just a legal obligation but also a tax-effective way to support your team.
Tip: Exceeding SG contributions without structuring them as salary sacrifice can lead to extra tax liabilities, so plan carefully and be sure to get in touch with one of the team at Bishop Collins to discuss.
Case Study: Avoiding the Super Maze
Business Name: Jane’s Cafe
Challenge: Jane’s small cafe struggled to keep up with quarterly super contributions due to manual payroll systems. She missed a payment deadline, resulting in penalties.
Solution: After a quick chat with her accountant, Jane upgraded to payroll software that automates super payments and tracks compliance with the SG.
Outcome: No more missed deadlines, happier staff, and peace of mind knowing her super obligations are covered.
The Right Super Fund: Your Default Port
If your employees don’t nominate a fund, you must select a default fund that complies with MySuper standards.
These are simple, low-cost options designed to benefit employees who don’t actively manage their super.
What Is Payday Super and Why Does It Matter?
Payday super is a significant upcoming change in Australia’s superannuation system, set to roll out in July 2026.
It will require employers to pay superannuation contributions at the same time as wages, instead of the current quarterly schedule. This change is designed to improve transparency and ensure employees receive their super contributions more promptly, helping to grow their retirement savings faster.
For businesses, this shift underscores the importance of automating payroll and super processes now, streamlining operations ahead of the transition. Learn more about how to prepare in our payday super guide.
Your Super Roadmap
Managing employer contributions to superannuation can be complex, but with the right tools and understanding, it’s just another checkpoint on your business journey.
Every step contributes to a stronger, more trusting workplace culture, whether it’s ensuring compliance with super guarantee, choosing a default super fund, or leveraging salary sacrifice.
At Bishop Collins, we’re here to guide you. From navigating super guarantee contributions to setting up tax-effective salary sacrifice arrangements, you’re not alone in business.
Download our exclusive Employer Super Checklist or get in touch with us today to discuss.