As an Australian business owner, you’re likely familiar with your obligations to employees, including payment of wages, entitlements, and ensuring health and safety. Another obligation to be aware of is providing superannuation to your employees.
Superannuation requires businesses to contribute to their employee’s retirement fund every quarter. Failure to pay could result in fines and even legal action.
Here is a guide to paying superannuation for Australian business owners, including:
Superannuation (Super) is a legal requirement set by the Australian government that requires employers to contribute to their employee's retirement fund.
If you’re a small business owner with employees, you must know your staff's salaries to contribute the required amount to their superannuation fund. You can even choose to offer additional contributions to your employee's superannuation as part of a benefits package to encourage the best talent to work for you.
Since superannuation is a legal requirement, it’s important to be diligent about contributing the correct amount. Failure to do so could lead to penalisation from the Australian government.
As a small business owner, you must contribute 11% of your employee's ordinary time earnings (OTE) towards their superannuation fund, known as the super guarantee charge. This is the super guarantee rate set until 30 June 2024. However, from 1 July 2024 to 30 June 2025 the amount you must contribute will increase to 11.5%. It must be paid at least quarterly, and contributions are tax-deductible for the employer.
For instance, for the financial year 2023-2024, if your employee earns $1,000 weekly in OTE, you must contribute at least $110 to their superannuation fund each week. For the 2024-2025 financial year, this number would be $115.
There are contribution caps based on employee salary and a maximum contribution base. If your employee makes over $250,000 annually (From 1 July 2017 the Division 293 threshold is $250,000), they must pay an additional 15% tax on their superannuation contributions. Seek advice from a tax accountant or financial advisor to ensure compliance with all laws and regulations.
When calculating your required superannuation requirements, include commissions, and bonuses in your employee’s OTE. TUse the Australian Taxation Office’s (ATOs) Super guarantee contributions calculator to find out how much to pay your employee.
By 2025, superannuation fund requirements will steadily increase to 12%. Ensure you stay updated with the laws and requirements set by the Australian government.
As an employer, there are several superannuation choices that you can offer to your employees. These include:
When choosing superannuation options for your employees, it's important to consider factors such as cost, investment options, insurance coverage, and other features that may be important to them.
Choosing a fund is not compulsory for an employee. If they don’t choose a fund, you must pay their contributions to their existing ‘stapled’ fund, which is advised by the ATO.
If the employee doesn’t have an existing ’stapled’ fund, you should contribute to the ‘default fund’ listed on the choice form.
As a business owner, not meeting your superannuation obligations could result in penalties and, in extreme cases, legal action. Here are some potential outcomes:
Paying your employees’ superannuation is an important part of running a business. If you fail to pay your obligations on time, you could face fines and even legal action.
QuickBooks has innovative features designed to aid businesses, including automated tracking of superannuation payments with Beam, reminders and alerts, and record-keeping features so that you can meet your obligations accurately and on time.
Streamline your reports and filings with powerful accounting software. Sign up for QuickBooks today and receive a 30-day free trial.
While every care has been taken to ensure the accuracy of the information presented as at 12 April 2024, Intuit is not providing you with professional advice and we recommend you obtain your own professional advice. Intuit is not liable for your use of the information presented.
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