Employer Super Contributions: Guide For Employers

As an employer, you have certain superannuation obligations to comply with the latest laws and support your employees’ financial future. The good news is our helpful guide will walk you through how to make super contributions. From the current super guarantee to the latest contribution rate, as well as best practices for the 2024–25 financial year, here’s what you need to know about making super contributions and giving your workers the chance to build a more secure retirement.

Superannuation obligations for employers

Under the superannuation guarantee (SG), employers in Australia are required to contribute to their employees’ own super fund. This mandate ensures workers have a source of income when they retire.

Here are some of the major obligations for employers:

1. Super guarantee contributions: You must make reportable employer super contributions to eligible employees, which are calculated as a percentage of the employee’s ordinary time earnings (OTE). Every contribution helps to build up their retirement savings.
2. Eligibility: Staff aged 18 and over are entitled to super contributions, as well as those who are under 18 and work more than 30 hours a week. This includes full-time, part-time and casual workers. Be aware that contractors who are paid primarily for their labour could also be entitled to super contributions, so do your research and speak to an accountant if you are unsure.
3. Regular payments: Super contributions must be paid at least quarterly by the due dates set by the Australian Taxation Office (ATO).
4. Record-keeping: As a small business owner, you need to keep detailed records of all superannuation guarantee contributions, including the amount paid, date of payment, the super fund’s details and more.
5. Choice of super fund: Employees have the right to choose their super fund, and employers must provide all employees with this choice. If they don’t have a preference, they can always have their contributions paid into the default fund for your business.

What is the current superannuation guarantee rate?

For the 2024-25 financial year, the super guarantee rate is set at 11.5%. This means that as their employer, you must contribute 11.5% of your employee’s ordinary time earnings into their super fund.

Be aware that the SG rate will increase again to 12% from 1 July 2025, so make sure you pay super at the correct rate to avoid potential legal issues. All business owners should plan ahead for these increases to ensure they are meeting their current and future obligations without any financial headaches.

How much super you must pay employees

The super contribution you’ll need to pay your employees will be calculated based on their ordinary time earnings (OTE). OTE includes most earnings, such as wages, commissions, allowances, and bonuses, but it doesn’t include overtime pay.
The easiest way to calculate the super contribution is to multiply your employee’s OTE by the current SG rate (11.5% for 2024–25). For example, let’s say an employee’s OTE is $5,000 per month — in this instance, the super contribution would be $575 ($5,000 x 11.5%).

Providing a choice of super fund

Every employer in Australia must be able to give employees a choice of their super fund. In other words, they need to be able to have all their reportable super contributions paid into their existing fund, or a new fund of their choosing.

As their employer, you’ll need to provide new workers with a standard choice form within 28 days of their start date. This basic document allows them to nominate their preferred super fund. If the employee doesn’t choose a fund, you will simply pay the contributions into the business’s default super fund.

Request stapled super fund details for employees

Since 1 November 2021, employers have had to take a few extra steps to comply with the ATO’s requirements around stapled funds. A stapled superannuation fund is an existing super account that follows an employee when they change jobs.

As their employer, you are required to request stapled super fund details from the ATO if a new employee doesn’t choose a super fund. This helps the worker maintain their super account and reduces the number of duplicate accounts that can build up over time (and through multiple job changes).

Paying by the super due dates

You need to pay super contributions by the due dates set by the ATO to avoid penalties. Here are the due dates for the 2024–25 financial year:

● Q1 (July – September): 28 October 2024
● Q2 (October – December): 28 January 2025
● Q3 (January – March): 28 April 2025
● Q4 (April – June): 28 July 2025

If a due date falls on a weekend or public holiday, the payment must be made by the next business day. Any businesses that fail to pay super contributions by the due date will likely incur penalties and potentially even fines. So make sure you stay on top of your super!

Assist employees with salary sacrificing if requested

You can help your employees further with salary sacrificing arrangements. This is a strategy where a portion of your staff member’s pre-tax income is redirected into their superannuation. It’s a way that they can get some tax benefits while simultaneously growing their retirement savings with salary sacrificed contributions.

However, it’s important to note that employers shouldn’t ever provide financial advice. You’ll need to formalise any salary sacrifice agreements in writing and specify the exact amount to be ‘sacrificed’ and how long the arrangement will last. It’s a good idea to review and update this agreement at least once a year.

What is the employer contribution cap for super?

The concessional contribution cap is the maximum amount of before-tax income that can be contributed to an employee’s super fund without incurring additional tax liabilities. For the 2024–25 financial year, the cap is $30,000 per annum. Concessional contributions include employer contributions, salary sacrifice contributions and any other contributions that receive a tax deduction.

For employees, there are also non-concessional contributions for voluntary after-tax contributions. These are currently capped at $120,000 for FY24–25.

Checklist: Super responsibilities for employers

Keep the following checklist handy so you are always on top of your employer super responsibilities:

● Employee eligibility for super contributions: Make sure all eligible staff, including full-time, part-time and casual workers, as well as certain contractors, are receiving their superannuation contributions.
● Calculate super contributions based on ordinary time earnings (OTE): Include earnings like wages, commissions and bonuses, but don’t include any overtime payments.
● Apply the current SG rate (11.5% for 2024–25): But also be aware that this rate will increase for the next financial year to 12%.
● Give all new staff a standard choice form: Provide them with the form within 28 days of their start date so they can choose their preference for super funds.
● Stapled super fund: Request details from the ATO (if necessary) to ensure you are always in compliance with the latest requirements.
● Pay super contributions: Avoid penalties by making timely payments by the quarterly due dates.
● Keep accurate records: Record all details of super payments and employee details for at least five years.
● Salary sacrifice: Help out employees with salary-sacrificing arrangements if they request it.
● Don’t exceed the concessional contributions cap: Manage contributions to stay within the current $30,000 cap. Also, stay current on any recent updates in case the cap changes.
● Communicate superannuation information: Inform employees about their super contributions and any changes to superannuation laws.
● Stay compliant: Regularly review your superannuation practices to ensure they comply with the latest regulations and any recent legal changes.
● Get help from a professional: Consult with superannuation experts or legal advisors to ensure full compliance. Also, take advantage of platforms like Reckon to make managing your super much easier.

Managing your superannuation obligations as an employer is something that’s essential for a small business owner. Not only will it mean you are in compliance with Australian laws, but you’ll also be supporting your employee’s future by building up their retirement savings. Just make sure you always stay informed about any changes to superannuation requirements and fulfil your obligations as an employer.