As an employer, the Super Guarantee (SG) legislation requires you to pay superannuation contributions on behalf of your employees. The current SG rate is 10% of your employees’ Ordinary Time Earnings. The SG rate will increase to 10.5% from 1 July 2022.
Ordinary Time Earnings (OTE)
Ordinary Time Earnings is the amount your employee earns in relation to their ordinary hours of work. It includes:
- over-award payments
- shift allowances
- paid leave
It does not include overtime payments.
How much to pay?
To work out how much you need to pay your employee, calculate the employee’s OTE for the quarter and multiple by the current SG rate of 10%.
Maximum superannuation contribution base
Each year, the Federal Government sets a maximum limit on an employee’s income on which you need to pay SG contributions, called the maximum superannuation contribution base.
The limit is indexed to AWOTE and changes every financial year. For 2021 - 2022 the maximum superannuation contribution base is $58,920 per quarter. So if an employee’s earnings exceed $58,920 for the quarter, you do not need to pay SG contributions on their earnings above this limit.
Note: Employers may be required to contribute above these limits under any industrial awards or workplace agreements in place.
When to make SG payments?
You can make SG payments fortnightly, monthly or quarterly. There are deadlines for quarterly payments.
Note, that late SG payments can affect an employee’s insurance claims and you could also receive penalties from the ATO.
Increases to SG contributions
The current rate is 10% and is due to increase gradually to 12% by 30 June 2025.
The full timetable is outlined below:
|1 July 2021 – 30 June 2022||10.00%|
|1 July 2022 – 30 June 2023||10.50%|
|1 July 2023 – 30 June 2024||11.00%|
|1 July 2024 – 30 June 2025||11.50%|
|1 July 2025 onwards||12.00%|