Running a business and employing people involves superannuation obligations.
All employees are covered by the superannuation guarantee legislation, whether they are full-time, part-time, or casual workers. This means that as an employer, you'll have to take certain steps during the employment process in order to meet your obligations.
What you need to do when paying employee superannuation
Business owners and employers need to:
- pay super contributions for eligible employees by the cut off dates each quarter
- pay at least the minimum 9.50% contribution amount of the earnings base (generally ordinary time earnings)
- check if any employees are eligible for a choice of super fund
- provide eligible employees with a Standard choice form
- pass on employee tax file numbers (TFN) to their super fund within 14 days of receiving a TFN declaration form (if you don't make contributions during that period, you can provide the tax file numbers when you make the contributions)
- pay super contributions for any eligible contractors
- keep records of super contribution payments and that a choice of super fund has been offered to eligible employees.
You can employ people under all business structures. If you're a sole trader, or in a partnership and have no employees, you're not obliged to pay super. However you can decide to make self-contributions to your super fund to help you plan for the future. Visit the Australian Taxation Office website to find out more.
Superannuation contributions and fund choices
All employers are required to offer their employees a choice of super fund on commencement. This involves:
- identifying new eligible employees
- providing a Standard choice form to eligible employees
- acting on your employee's choice of super fund.
Payment cut-off dates for super contributions each year are:
- 28 January
- 28 April
- 28 July
- 28 October.
If you don't make your superannuation contributions by these cut off dates, you'll face penalties. Visit the Australian Taxation Office website to find out what to do if you haven't made your contributions on time.
Start-up, micro, and small business owners
Are you a small business owner with 19 or fewer employees, or with an annual turnover of less than $10 million? The Small Business Superannuation Clearing House is a free online service that helps small businesses meet their superannuation guarantee obligations.
The service makes it easier for employers to pay all their super contributions online in one transaction, which are then counted as being paid on that date. It also gives employers 21 days leeway to pass on employee choice of fund details.
Register as a small business with the Clearing House to take advantage of this service.
Superannuation Data & Payment Standard (SuperStream)
If you have employees, you need to use the SuperStream data and payment standard to make super contributions.
The standard offers a simpler way of making super contributions and, for many employers, will provide a single channel for making contributions to multiple super funds.
All businesses with employees should now be using SuperStream.
Under the SuperStream standard, you need to:
- send all super data electronically (such as the employee's details and the amount of super being paid)
- make contribution payments electronically
- link data and money with a unique payment reference number
- send data and payments on the same day.
Some options to help you meet the standard include:
- upgrading your software so that it complies with the standard
- engaging a service provider who can meet the standard on your behalf
- getting advice from your super fund on how your business can meet the standard.
Find out more about SuperStream on the Australian Taxation Office website.
Australian Taxation Office (ATO) superannuation resources
Read the ATO's guide to superannuation for employers for more details on:
- Working out if you have to pay super
- Setting up super for a worker
- How much to pay and when to pay
- What you must do if you haven't met your obligations
- Records you need to keep.
Use the Super obligation employer's checklist to check you are meeting all your super obligations as an employer.
The ATO also provides useful tools for employers, including:
- Find out if your worker is considered an employee or contractor for super purposes
- Check if your employee is eligible for super contributions at Superannuation guarantee eligibility
- Calculate how much super you need to contribute for your eligible employees at Superannuation guarantee contributions. It will take you just a few minutes to calculate contribution amounts. You can also print a copy of the calculations for your records.
Read Independent contractors to find out more about employing contractors.
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