Revisiting super basics for employers
For many employers, it can be easy to forget the responsibility of managing your superannuation obligations amidst the busy lifestyle of operating a business.
However, those who fail to meet their super obligations risk facing severe and even damaging liabilities.
Employers who pay their workers $450 or more before tax in a calendar month must pay superannuation on top of the employee's wages. If an employee is under the age of 18 or is a private or domestic worker, they must work for more than 30 hours per week to qualify. The minimum an employer must pay is called the super guarantee (SG).
The SG is current 9.5 per cent of an employee's ordinary time earnings, and must be paid at least four times per year. Employers who fail to pay the SG on time may have to pay a super guarantee charge (SGC).
Employees can choose the fund you pay their super into. However, if an employee is not eligible to choose or does not make a choice, the employer must pay their contributions into an employer-nominated or default fund.
The employer-nominated or default fund must be a complying fund (meets specific requirements and obligations under super law) and be registered by the Australian Prudential Regulation Authority (APRA) to offer a MySuper product.
Some super funds may ask that an employer becomes a 'participating employer' before they can pay contributions to them. Participating employers may have to make super payments more frequently; such as monthly instead of quarterly.
Employers can claim a tax deduction for super payments they make for employees in the financial year they make them. Contributions are considered to be paid when the employee's super fund receives them.
Missed payments may attract the SGC (superannuation guarantee charge). While the SGC is not tax-deductible, employers can use a late payment to reduce the charge or as pre-payment of a future super contribution (for the same employee), which is tax-deductible.