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Employer Legal Obligations
Employer Legal Obligations

Employer Legal Obligations

As an employer what are my legal obligations?

Am I an employer for super purposes?

You are classified as an employer if you employ a person under a verbal or written contract on a full time, part time or casual basis. You may also be an employer for super purposes if you make payments to a person under a contract for labour.

How much super do I pay?

Super Guarantee (SG) is a compulsory contribution made by all employers on behalf of each eligible employee. The contribution is paid directly to each employee’s nominated super fund, or a default fund on their behalf.

SG is based on a percentage of each employee’s Ordinary Time Earnings* up to a Maximum Contribution Base*. If the employee’s Ordinary Time Earnings exceed the Maximum Contribution Base, the employer only needs to calculate the SG contribution on the Maximum Contribution Base.

The SG rate will remain at 9.5% until 30 June 2021 and then increase by 0.5% each year until it reaches 12% in 2025/2026.

Financial yearCurrent SG Rate
2014/15 – 2020/219.5%
2021/2210%
2022/2310.5%
2023/2411%
2024/2511.5%
2025/2612%

* For more information on Ordinary Time Earnings and Maximum Contribution Base limits go to www.ato.gov.au

When is the SG contribution due?

SG contributions must be made quarterly by law, but can be made as frequent as your business requires. See below table for quarterly due dates.

Quarter

Cut-off date for payment

1 (Jul - Sep)

28 October

2 (Oct - Dec)

28 January

3 (Jan - Mar)

28 April

4 (Apr - Jun)

28 July

When a cut-off date for payment falls on a Saturday, Sunday or public holiday you can make your payment on the next working day after that date.

Do I have to pay super for my employees?

Generally, you have to pay super for your employees if they:

  • are paid $450 or more, before tax, in salary or wages in a calendar month; and
  • are aged 18 or over or, if under the age of 18, are working more than 30 hours per week.

Do I have to pay super for contractors?

You may have to make super payments for contractors. There are electronic tools available to help you work out:

  • If someone is an employee or a contractor
  • If someone is eligible for super
  • How much super you have to pay for each eligible employee.

To find out if you are required to pay super for a employee/contractor visit the ATO website and use the Employee/Contractor Decision tool.

Where do I pay super contributions?

You may need to pay contributions into a complying super fund or retirement savings account. Your employees may be able to choose the super fund you pay their super contributions into.

For more information on paying super contributions to multiple funds in one payment, please refer to our Clearing House section on our website.

What is a default super fund?

Before you offer your employees the option to choose a super fund, you must have a fund you will pay their super into if they can’t or don’t choose their own fund. This fund is referred to as your default fund.

The super fund you nominate must:

  • Be a complying super fund
  • Be registered by the Australian Prudential Regulation Authority (APRA) to offer a MySuper product.
What do I need to do to nominate Energy Super as my default super fund?To nominate Energy Super as your default fund simply complete the Employer Application form. You then have 28 days to provide a new Standard Choice Form to your employees with our details. Energy Super can provide you with a Standard Choice Form pre-populated with our details for you to give to your employees.

Do I need to offer my employees a choice of super fund?

Not all employees are eligible to choose their super fund. It generally depends on the award or industrial agreement that you employ them under. You need to provide a Superannuation Standard Choice Form to all new employees who are eligible to choose a super fund. You need to provide this form within 28 days of the eligible employee commencing employment.

If an employee doesn’t specify a preferred super fund, then you must pay their super contributions into your chosen default fund.

Can I claim a tax deduction?

Generally, SG contributions are tax deductible in the financial year that they are paid. You cannot claim a tax deduction for the superannuation guarantee charge because it is a penalty for failing to meet your super obligations by the cut-off date.

What if I don't meet my super obligations?

If you don't meet your super obligations you'll have to pay a super guarantee charge to the ATO.

What records do I need to keep?

You need to keep records that show:

  • the amount of super you paid for each employee
  • how you worked out the level of super you paid
  • your company’s default super fund is compliant and meets minimum life insurance requirements
  • that you have offered your eligible employees a choice of super fund.

Providing tax file numbers to super funds

If your employees provide their tax file number (TFN), you must pass their TFN onto their chosen super fund the next time you make a payment for them. If you receive the TFN less than 14 days before you are due to make a superannuation payment, you have 14 days to give the TFN to their chosen fund.

There are penalties if you do not pass on an employee’s TFN to their fund. It is also your responsibility to ensure that third party providers, such as payroll providers, pass on employee’s TFNs to their super funds.