What is superannuation?

Superannuation is the money that is set aside over your employee’s lifetime to provide for their retirement. Under the Superannuation Guarantee (Administration) Act 1992 (Cth) the employer has obligations to provide a portion of the employee’s salary or wages into a superannuation fund. This is called a superannuation guarantee contribution or concessional contributions.

Superannuation may be invested in shares, property and managed funds. Superannuation contributions will need to be paid every 3 months into your employee’s nominated account. If superannuation is not paid on time, then you may incur a superannuation guarantee charge (SGC).

Is your employee entitled to a superannuation?

Under the superannuation guarantee, the employer will have to pay superannuation contributions of 9.5%[1] on the employee’s ordinary time earnings if:

  • The employee is paid $450 or more before tax each month;
  • Is over 18 years old; or
  • The employee is 18 years old but works over 30 hours a week.

This includes full time employees, part time employees, some causal employees and temporary residents. It is important to note that some awards, enterprise agreements or registered agreements may have extra terms regarding superannuation. It is important that you are aware of any awards, enterprise agreements or registered agreements that may be applicable to your employee.

The following employees are not entitled to super:

  • non-resident employees who are paid for the work they do outside of Australia;
  • some foreign executives who hold certain visas or entry permits;
  • employees under the Community Development Employment Program;
  • members of the naval or air force reserved or the army; and
  • employees who are temporarily working in Australia and are covered by a bilateral super agreement.

What happens if you have failed to pay your employee’s superannuation guarantee contributions?

If you have missed a payment or you have not paid your employee’s superannuation contribution in time or to the right fund, then you may need to pay the SGC and lodge a SGC statement.

If it is a late superannuation payment then you may be able to use the late payments to offset the superannuation guarantee charge or to carry forward as prepayment of a future contribution to the same employee.

The quarterly payments for when superannuation payments are due are:

Quarter Period Due Date for Payments
1 1 July – 30 September 28 October
2 1 October – 31 December 28 January
3 1 January – 31 March 28 April
4 1 April – 30 June 28 July

[1] As at July 2018.

If you fail to meet your superannuation guarantee obligations, you may be liable for a range of penalties and charges on top of the SGC. Your employee may make a complaint to the Australian Taxation Office (ATO) who may assist in the collection of the unpaid superannuation contributions and any SGC. In the event that you won’t assist or engage in the recovery of the SGC, the ATO may take actions such as a director penalty notice or a garnishee notice.

As of 24 May 2018, the Minister for Revenue and Financial Services has announced a 12 month Superannuation Guarantee Amnesty (the Amnesty). The Amnesty is a one-off opportunity for employers to self-correct their past superannuation guarantee non-compliance without penalty. The Amnesty will not apply to the period starting on 1 April 2018 or subsequent periods. For employers who are not up to date with their superannuation guarantee contributions and fail to come forward during the Amnesty, may face higher penalties in the future.

If you have any questions in relation to your superannuation obligations or unpaid please do not hesitate to contact Morrissey Law & Advisory.

This article was prepared by Michael Morrissey and Mary Ann Wen.


Disclaimer: This publication by Morrissey Law & Advisory is for general information and commentary only and should not be considered or relied upon as legal advice. Formal legal advice should be sought in relation to any matters or transactions that may arise in relation with communication.