Employer's obligations to pay superannuation in Australia

If you employ anyone, you are obligated to pay a minimum of 9% of their normal ordinary earnings into a super fund. The payments must be made at least quarterly within 28 days of the end of each quarter. Ordinary earnings do not include overtime but may include many types of award payments such as bonuses. Check the ATO's guide to determine what earnings are to be included. No super is payable for employees in the following situations:

  • If the employee earns less than $450 in a month.
  • For the current 2011/12 financial year, if an employee earns more than $43,820 in a quarte, no super is payable on the excess.
  • If the employee is under 18, no super is payable unless they work more than 30 hours per week.
  • If the employee is over 70, no super is payable. While this is the current position for the 2011/12 financial year the government is proposing to increase this to 75.
The amount of super payable is determined on a quarterly basis, although many employers prefer to make payments on a monthly basis.

Am I an Employer?

You're an employer for super purposes if you employ a person under a verbal or written contract on a full-time, part-time or casual basis. This includes friends and relatives.

Not paying super for contractors?

There is a misconception by many employers that super is not payable if you hire contractors. This may not be the case. For example, if the contractor only works for your business then more than likely you will be obligated to pay superannuation even though they may have their own ABN number and invoice you for payment of their services.

The ATO has a good decision tool which is designed to help you (as a payer) understand whether your individual workers are employees or contractors in order to comply with your Commonwealth tax and superannuation obligations.

Claiming a tax deduction for super contributions

Generally, an employer is able to claim a tax deduction for all compulsory super payments on behalf of employees. The deduction claimed in any financial year must have been paid and received by the super fund in that financial year. Note, the obligation to pay the last quarters (April-June) super contributions is not due until 28th July and if paid after 1st July can only be claimed as a tax deduction in the year actually paid.

Failing to meet your obligations

If you do not meet your obligations then the amount payable to the super fund becomes payable to the ATO along with interest and an administration fee for each employee.


Rob Bourne has been involved in the financial services industry for over 35 years. As a practising financial adviser he focuses on the need for practical and down to earth financial education. The aim is to educate people through financial education so they can take control of their own financial future. Visit Rob's website here for more information on business opportunities, investing and financial education or the complete guide to superannuation a...

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