What Is Superannuation?
Superannuation (super) is Australia's compulsory retirement savings system. As an employer, you're legally required to pay a percentage of each eligible employee's earnings into a super fund. These contributions build up over the employee's working life and become accessible when they retire.
It's not optional, it's not a perk, and getting it wrong carries serious penalties.
The Current Super Guarantee Rate
As of 1 July 2025, the Super Guarantee (SG) rate is 12% of an employee's ordinary time earnings (OTE). This rate applies to all eligible employees regardless of how much they earn.
The SG rate has been gradually increasing over the past several years:
| Financial Year | SG Rate |
|---|---|
| 2023-24 | 11.0% |
| 2024-25 | 11.5% |
| 2025-26 | 12.0% |
The rate is now at its legislated ceiling of 12%.
Who Must You Pay Super For?
You must pay super for any worker who is your employee (not a contractor) and earns $450 or more in a calendar month. However, from 1 July 2024, the $450 monthly threshold was removed entirely — meaning you must now pay super on every dollar of ordinary time earnings for eligible employees, regardless of how little they earn.
You Must Pay Super For:
- Full-time employees — always
- Part-time employees — always
- Casual employees — always (the $450 threshold no longer applies)
- Employees under 18 — if they work more than 30 hours per week
- Some contractors — if they work primarily for you and the contract is principally for their labour
You Don't Pay Super For:
- Genuine independent contractors who use their own ABN and control how the work is done
- Employees under 18 who work 30 hours or less per week
- Non-resident employees paid for work done entirely outside Australia
The Contractor Grey Area
The distinction between employee and contractor is one of the most contested areas in Australian employment law. The ATO looks at the whole arrangement, including:
- Who controls how the work is done?
- Does the worker provide their own tools and equipment?
- Can the worker delegate or subcontract the work?
- Is the worker paid per task or per hour?
- Does the worker have their own ABN and insurance?
If in doubt, treat the worker as an employee for super purposes. The consequences of underpaying super are far worse than overpaying it.
What Are Ordinary Time Earnings (OTE)?
Super is calculated on ordinary time earnings, which includes:
- Base salary or wages
- Commissions
- Shift loadings
- Allowances (in most cases)
- Paid leave (annual leave, sick leave, long service leave)
- Bonuses that relate to ordinary hours of work
OTE does not include:
- Overtime payments
- Reimbursements for expenses
- Workers' compensation payments
- Termination payments (some components excluded)
Quarterly Deadlines
Super contributions must be received by the employee's super fund by the quarterly due date — not just sent, but received.
| Quarter | Period | Due Date |
|---|---|---|
| Q1 | 1 Jul – 30 Sep | 28 October |
| Q2 | 1 Oct – 31 Dec | 28 January |
| Q3 | 1 Jan – 31 Mar | 28 April |
| Q4 | 1 Apr – 30 Jun | 28 July |
Important: These dates are firm. If the 28th falls on a weekend or public holiday, the payment must be received by the preceding business day — not the following one. Plan ahead and allow processing time.
Choosing a Default Super Fund
Every employer must have a default super fund — the fund you pay into when an employee doesn't choose their own. Since 1 November 2021, you must first check with the ATO whether a new employee has an existing "stapled super fund" before using your default.
The Stapled Super Fund Process
- A new employee starts and doesn't nominate a super fund
- You log into ATO Online Services for Business
- You request the employee's stapled fund details
- If a stapled fund exists, you pay into that fund
- If no stapled fund exists, you pay into your default fund
Your default fund must be a MySuper product — a simple, low-cost super option designed for people who don't actively choose a fund.
SuperStream: How to Pay Super
You can't simply transfer money to a super fund's bank account. Super contributions must be made through SuperStream — the ATO's standardised electronic system.
Options for making SuperStream-compliant payments:
- Your payroll software — most modern payroll systems have SuperStream built in
- A clearing house — the ATO offers a free Small Business Superannuation Clearing House (SBSCH) for businesses with 19 or fewer employees
- Your super fund's employer portal — some funds offer direct employer payment options
The ATO's free clearing house is the easiest option for most small businesses. You make one payment to the clearing house, and it distributes the money to each employee's fund.
Penalties for Late or Missing Super
The ATO takes super compliance seriously. If you miss a deadline, you'll face the Super Guarantee Charge (SGC), which includes:
- The original super amount you should have paid
- Interest on that amount (currently 10% per annum)
- An administration fee of $20 per employee per quarter
The SGC is not tax-deductible, unlike regular super contributions which are. This means late payment costs you significantly more than on-time payment.
In serious cases, the ATO can also impose additional penalties of up to 200% of the SGC amount, and directors can face personal liability.
Record-Keeping Requirements
You must keep records of:
- Each employee's super fund details and choice
- Contributions made (amounts, dates, and funds)
- Confirmation that contributions were received by the fund
- Any relevant correspondence
Keep these records for at least five years after they're created.
Common Mistakes to Avoid
1. Paying Late and Hoping Nobody Notices
The ATO's data-matching systems cross-reference employer payment data with super fund receipt data. Late payments are detected automatically.
2. Calculating Super on Net Pay Instead of OTE
Super is calculated on gross ordinary time earnings, not on what the employee takes home after tax.
3. Forgetting Super on Terminated Employees
If an employee leaves mid-quarter, you still owe super on their earnings for the period they worked. Pay it by the quarterly deadline.
4. Not Checking for Stapled Funds
Since November 2021, you must check for a stapled fund before defaulting to your own fund. Failure to do so can result in multiple unnecessary accounts for the employee and regulatory scrutiny.
How OneBookPlus Helps with Super Compliance
Managing super obligations is one of the most stressful parts of being an employer. OneBookPlus simplifies the process by helping you track employee earnings and calculate super obligations accurately.
With OneBookPlus, you can:
- Track employee ordinary time earnings in one place
- Calculate SG obligations at the current 12% rate
- Set reminders for quarterly super deadlines
- Keep records of all payroll and super-related transactions
- Generate reports for BAS and super reconciliation
Related Reading
- PAYG Withholding Guide
- How to Lodge a BAS
- Free Superannuation Calculator
- OneBookPlus for Accountants
Stay compliant without the spreadsheet headaches. Sign up for free and take control of your employer obligations.