There are a few things you need to know about making contributions. You'll find them here.
Employers are required by law to pay contributions on behalf of eligible employees. These contributions are usually referred to as Superannuation Guarantee (SG) Contributions and are typically 9.5% of your employee’s salary or ordinary times earnings, which could include award payments, bonuses, commission and allowances.
Employers can usually claim a deduction for all contributions made on behalf of employees. These employer contributions and deductible personal contributions will be assessed against the concessional contributions cap.
Meeting your superannuation requirements doesn’t have to be difficult. Here are some check-lists to help you determine where you need to pay your SG contributions.
- Do you employ a person under a verbal or written contract on either a full-time, part-time or casual basis?
- Are they over 18?
- Are they paid $450 (before tax) or more in a calendar month?
If you said yes to all of the above, then you need to make a SG contribution.
- Are you hiring the contractors wholly or principally for their labour?
- Are they conducting the work themselves (ie. not free to engage others)?
If you said yes to all the above, then you may be required to pay their superannuation contributions, even if they quote an Australian Business Number (ABN).
Self-employed people can choose whether or not they wish to have superannuation.
If you are self-employed, you may want to consider superannuation as a way of saving for your retirement. In most cases, self-employed people can claim a full tax deduction on contributions made up to age 75. Directors who receive salary or wages are generally entitled to superannuation contributions from their employer, provided they meet the eligibility requirements.
Step 1: Calculate your employee's Ordinary Time Earnings (OTE) per calendar month.
Employers must use Ordinary Time Earnings (OTE) as defined in superannuation guarantee law to calculate the minimum SG contributions for their eligible employees. OTEs are generally what your employees earn for their ordinary hours of work, including over-award payments, bonuses and commissions.
Step 2: Work out 9.5% of your employee's salary or OTE
This is the minimum SG contributions that you are required to pay on your employee's behalf. Please note that this is due to increase over the coming years to 12%.
Step 3: When to make payments
You are required to pay these contributions at least quarterly by a specific cut-off date for each quarter - we've outlined these below:
|Quarter||Quarter Payment cut-off date|
| Quarter 1
1 July - 30 September
1 October - 31 December
1 January - 31 March
1 April - 30 June
If you fail to make your payments by the quarterly cut off point, or you don’t contribute enough for each employee, you'll need to lodge an SG charge statement with the ATO and pay the SG charge.
The charge applicable is the employee's SG shortfall amount, nominal interest of 10% p.a. and an administration fee of $20 for each employee where there is a shortfall. The information above is intended as a guide only. If you are unsure about who you need to make contributions for we suggest you contact the ATO.
Step 4: Where contributions are paid
You must pay contributions into a complying superannuation fund or RSA. Most employers select a superannuation fund they present to their employees as the business’ nominated fund, but in most cases, employees have the right to choose which superannuation fund is right for them. Since 1 January 2014, all employers must pay contributions into a MySuper authorised product for any employee who has not made a choice of fund.
Step 5: How to pay contributions
By the end of June 2016, SuperStream requirements will apply to all employers.
To meet SuperStream compliance, your options may include:
- Upgrading your payroll software
- Using an outsourced payroll function or other service provider
- Using a commercial clearing house or the free Small Business Superannuation Clearing House (19 or fewer employees).
If Virgin Super is your default Super fund, we can provide you with access to our SuperStream compliant Clearing House to make contributions on behalf of your employees.
If you’re not using the Virgin Super QuickSuper Clearing House to make contributions, you’ll need the following information:
- Our Fund name: Virgin Super
- Our Australian Business Number (ABN): 88 436 608 094
- Our Unique Superannuation Identifier (USI): 88 436 608 094 001
- Your employee’s Virgin Super member number (optional)
If your business has 19 employees or less, you can organise for all your employees’ contributions to be paid to the Small Business Superannuation Clearing House
- You’ll first have to register your business online with your Australian Business Number (ABN) and business contact details (including email address)
- You'll then only have to make one single electronic payment
- The clearing house will distribute payments to each fund, including Virgin Money, on your behalf
To help you use this facility, the clearing house has a complete ‘How to’ guide available online.
The information above is intended as a guide only. If you are unsure about who you need to make contributions for we suggest you contact the ATO.
As an employer, it's important you fully understand your superannuation obligations as failure to meet these minimum requirements could mean financial penalties from the Government.