This is part 2 in our Superannuation for Employers series. Part 1 covered obligations when onboarding a new employee and this week's blog will cover your obligations as an employer, how much super you must pay, when it must be paid and how to pay it.
If you haven't already, we strongly advise you read part 1 before proceeding with part 2.
Obligations
The current superannuation statutory rate as of 1 July 2022 is 10.5%. This means that the minimum amount you must pay to avoid the superannuation guarantee charge is 10.5% of your employee's ordinary time earnings.
Who do you need to pay super for?
Superannuation is a requirement for all employees, with the exception of those who are under 18 and work less than 30 hours per week.
Before 1 July 2022, there was an exemption for those who earned less than $450 per month. This is no longer applicable.
The employment type of the employee does not impact superannuation requirements either, it's a requirement for full-time, part-time, casual and temporary employees.
There is no exception or exemption for company directors either. If you pay yourself wages or directors fees from your company you must comply with all superannuation guarantee rules.
You must also pay superannuation for contractors if you pay them mainly for their labour. This may be the case even if they quote an Australian Business Number (ABN).
The ATO has a handy tool that helps determine if you need to pay someone super. Find that tool here.
When is super paid?
Superannuation is due on a quarterly basis on the 28th day of the following quarter.
Quarterly super payment due dates are:
Quarter | Period | Due Date |
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 |
In this instance, 'due' means that it must hit the employee's superannuation fund by that date, not that the payment must be made by this date. For this reason, it's possible that the payment leaves your account before the due date but the payment is still considered late. For this reason, it's recommended to pay super as close to the start of the month as possible to allow enough time for payment to process. Most clearing houses take 5-7 business days to clear, but it's advised to leave at least 10 business days just in case.
How is super paid?
Super is paid through something called a clearing house. A clearing house distributes super contributions to your employee's funds on your behalf, allowing you to make one bulk payment for super.
There are multiple choices for clearing houses, being:
The ATO Small Business Superannuation Clearing House; accessible through online services for business and by tax and BAS agents through online services for agents
Your accounting software such as Xero, Quickbooks or MYOB may have automatic superannuation payments built into it; or
Your default superannuation fund may allow you to use their clearing house
It's up to you which clearing house you choose to use, but keep in mind that while above we advised that the super is only considered to be 'paid' on the date that it reaches the fund - if you pay through the ATO clearing house, the payment is considered 'paid' on the date the funds are received by the ATO which is likely to be closer to the date they leave your account.
At this stage, we recommend you complete the ATO checklist for super obligations for employers, to ensure you're understanding your obligations correctly.
Still having trouble or need some further explanation? Contact us at admin@herveybaytax.com or on 07 4334 0002.