Employer Super Obligations
The ATO has reminded employers that their superannuation continues even in these very difficult times.
While the value of some super funds has declined recently, super is still the main way many individuals save money to provide benefits for their retirement.
Generally, as an employer, you must pay super for your employees if they:
- are between 16 and 69 years of age (inclusive)
- are paid $450 or more (before tax) in a calendar month, and
- work on a full-time, part-time or casual basis.
Employers must also make super payments for contractors who are paid wholly or principally for their labour even where these contractors quote an Australian business number (ABN). Labour includes physical labour, mental effort, or artistic effort.
The ATO is aware that some employers are incorrectly making late or insufficient super payments for their employees. You need to contribute 9% of each eligible employee’s ordinary time earnings to a complying super fund by the quarterly cut-off dates – 28 April, 28 July, 28 October and 28 January.
Super guarantee contributions are calculated using your employee’s ‘ordinary time earnings’. Ordinary time earnings are generally what an employee earns for their ordinary hours of work. It includes over-award payments, shift loading or commissions.
Generally, you may be required to offer a choice of super funds to eligible employees and then you are required to pay super into each employee’s nominated fund.
You also need to provide an employee’s tax file number (TFN) to their super fund within 14 days of receiving it. If employers don’t pass on an employee’s TFN, the employer could be subject to a penalty.
Not paying enough super by the deadline or to an employee’s chosen super fund means you’ll have to pay the super guarantee charge to the Tax Office.
Employers can’t claim a tax deduction for the super guarantee charge but, where super contributions are paid but, where super contributions are paid by the quarterly deadlines, they are tax deductible in the year they are paid.