Understanding Your Superannuation Responsibilities as an Employer

Running a business involves juggling multiple tasks, but amidst the chaos, it's crucial not to overlook your superannuation guarantee to your employees. Neglecting these responsibilities can lead to serious consequences, including penalties and legal troubles. Let's dive into what you need to know about your superannuation guarantees.

Stapled Super Funds and Employee Choices

When employees join the workforce, they should have a designated 'stapled' super fund where they are required to contribute their superannuation. Alternatively, they have the right to select their super fund. However, in cases where an employee is unable to choose a fund, lacks a fund, or fails to inform the employer, you must direct their contributions to an employer-nominated or default fund.

The chosen fund must be compliant with specific regulations and obligations under superannuation laws, and it should be registered by the Australian Prudential Regulation Authority (APRA) to offer a MySuper product.

Who are Participating Employers and what Payment Frequencies for super guarantee?

Certain super funds might necessitate that you become a 'participating employer' before making contributions to them. As a participating employer, you might need to make more frequent super payments, such as on a monthly basis instead of quarterly.

What are Expanded Super Guarantee Contributions?

It's important to keep up with the evolving superannuation landscape. As of 1 July 2022, a significant change occurred regarding super guarantee contributions. Employers were previously required to pay superannuation for employees who earned $450 or more before taxes in a calendar month. Now, super must be contributed for domestic or private workers who put in more than 30 hours of work per week, regardless of their earnings.

What are the Superannuation Guarantee (SG) Essentials?

The superannuation guarantee (SG) sets the minimum amount of superannuation an employer must pay to their employees in Australia. As of 1 July 2023, the SG mandates that employers contribute 11% of an employee's ordinary time earnings. This applies to employees who are either over 18 years old or under 18 years old but work more than 30 hours per week.

Currently, these contributions are required at least four times a year. However, starting from 1 July 2026, employers will need to pay their employees super concurrently with their salary and wages. This is termed 'payday super,' a change that aims to enhance compounding potential within superannuation funds due to more consistent contributions.

What are Tax Deductions and Missed Payments for Super guarantee?

Employers can claim a tax deduction for the super payments they make for employees within the same financial year. The timing of the deduction aligns with when the employee's super fund receives the contributions.

In cases where payments are missed, the superannuation guarantee charge (SGC) might apply. Although the SGC is not eligible for the tax deduction, employers can utilize a late payment to offset the charge or consider it as a pre-payment for a future super contribution for the same employee, which can be tax-deductible.

Seeking Assistance

If you're uncertain about your superannuation obligations as an employer, consider reaching out to our team members for guidance. They are well-equipped to help you navigate through these matters and ensure you fulfill your responsibilities effectively.