When you hire your first employee in Australia, you immediately take on legal obligations under the Superannuation Guarantee (Administration) Act 1992.
Superannuation (super) is a compulsory retirement savings system where you must contribute a percentage of your employees' ordinary time earnings into a complying super fund.
Failure to pay correctly results in steep penalties. This guide explains everything you need to know as a new employer.
1. Who Must You Pay Super For?
You must pay super for any employee who is:
- Over 18 years old, regardless of how much they earn.
- Under 18 years old and working more than 30 hours per week.
- Working full-time, part-time, or casual (including temporary residents).
- A company director or officeholder (under some circumstances).
Contractors who are considered 'deemed employees' under ATO rules (mostly labour-only contractors in industries like construction, cleaning, or courier services) are also entitled to super.
Exception: You generally do not pay super for contractors who have their own ABN, set their own hours, and provide their own tools/equipment.
2. Super Guarantee Rate (2025–2026)
The Super Guarantee (SG) rate is legislated to increase progressively until it reaches 12%.
- 2024–2025 financial year: 11.5%
- 2025–2026 financial year: 12%
- Beyond 2026: Remains at 12% (unless Parliament amends further).
You calculate SG based on Ordinary Time Earnings (OTE) — your employee's normal pay, excluding overtime.
OTE includes base salary, commissions, shift loadings, bonuses, and allowances.
3. Key Deadlines & Frequency
You must pay super at least quarterly within 28 days after the end of each quarter.
Use these deadlines:
- Quarter 1 (July–September): Due 28 October.
- Quarter 2 (October–December): Due 28 January.
- Quarter 3 (January–March): Due 28 April.
- Quarter 4 (April–June): Due 28 July.
Critical: If you pay late, you cannot claim a tax deduction for that contribution and you must pay the Super Guarantee Charge (SGC) — which is much higher and includes interest and penalties.
4. Choosing a Super Fund
Employees can choose their own super fund. You must provide a Standard choice form (ATO form NAT 13080) to new employees within 28 days of their start date.
If they do not choose a fund, you pay into your default fund (which must be a 'complying' fund, often one linked to your industry award or a MySuper product).
Popular default funds include: AustralianSuper, Hostplus, Rest, Sunsuper (now Australian Retirement Trust), and industry-specific funds like CBUS (construction) or HESTA (health).
5. How to Make Super Contributions
Most employers use STP-enabled payroll software (Xero, MYOB, QuickBooks) that automatically calculates and processes super payments.
Alternatives include:
- ATO's Super Clearing House (free for employers with 20 or fewer employees).
- Commercial clearing houses (Payroller, Employment Hero).
- Direct payments to each fund (time-consuming, not recommended).
When paying, you must include the employee's TFN and the payment period. Incorrect data leads to 'unclaimed money' held by the ATO.
6. Penalties for Late or Missed Payments
If you miss the quarterly deadline, you must lodge a Superannuation Guarantee Charge (SGC) statement and pay:
- The original SG amount.
- Interest (currently 10% per annum, compounding).
- An administration fee of $20 per employee per quarter.
Additionally, you cannot claim a tax deduction for SGC payments. For repeated or deliberate non-payment, directors can be personally liable and face fines exceeding $100,000.
7. Practical Checklist for First Employee
- Ask the employee to complete a TFN declaration and Super Standard choice form.
- Set up STP reporting through your accounting software.
- Choose a default super fund (if you don't have one).
- Set calendar reminders for quarterly due dates (28 Jan, 28 April, 28 July, 28 Oct).
- Keep records of every contribution for at least 5 years.
Pro tip: Pay super monthly instead of quarterly to align with cash flow and avoid accidentally missing a deadline.