How to set up a new employee's super
Employees may choose their own superannuation fund or retirement savings account.
As an employer, you're required to offer a new employee a choice of super fund within 28 days of them starting. You must tell them the name of your default fund – the fund you will pay their super to if they don't choose a fund, or you are not provided with an employee 'stapled super fund' by the Australian Taxation Office (ATO).
You provide this information to your employees by completing section B of the Standard choice form.
Choosing a default super fund
Check the list of complying super funds to find a default fund that's right for your business.
If a fund is not listed, you can get written confirmation from the fund's trustee that it:
- is a complying super fund
- intends to accept your super contributions
- will continue to meet the relevant legal requirements
Some industrial awards require employers to pay super contributions to a specific super fund. Check the award to see if this affects your employees.
If the worker doesn’t choose a fund
If your new employee doesn't choose a fund, you must request their stapled super fund from the ATO.
You must pay super guarantee (SG) contributions to their stapled super fund if:
- the employee doesn’t choose a fund, and
- the ATO provides you with their stapled super fund details
Which employees don't you pay super for?
For superannuation purposes, the definition of an employee is broad. In some cases, you may have to pay a contractor's superannuation.
To help you work out which of your workers are eligible for super, use the SG eligibility decision tool on the ATO website:
Super for employees under 18 years
You must pay super for an employee aged under 18 years if they work for you more than 30 hours in any week, regardless of how much you pay them. Before 1 July 2022, employees also had to earn at least $450 (before tax) in a month to be eligible for super.
How much super should you pay?
You can use the ATO's SG contributions calculator to find the correct amount of super you'll need to pay. You'll need to know your employee's income and their chosen super fund.
How to pay super
There are 3 ways you can pay to your employees' super funds:
- through a SuperStream compliant system
- through a commercial clearing house or the Small Business Superannuation Clearing House
- direct to the super fund or retirement savings account (at least by the due date every quarter)
What is SuperStream?
SuperStream is a data standard for funds and employers designed to make super contributions simple. SuperStream minimises the different types of data and payment methods employers have to provide to make contributions for their employees.
There are several options available for employers to meet SuperStream requirements:
- your own payroll (SuperStream compliant)
- clearing houses
- default super funds
- assistance from your accountant or bookkeeper
What is a clearing house?
A clearing house is a portal that allows you to make all your super contributions for all your employees in one payment – even if they're with different super funds.
For businesses with 20 employees or fewer, you can pay super for all employees in one lump sum to the Small Business Superannuation Clearing House.
What are the super payment due dates?
To comply with your super obligations, you must pay the amount you owe to a superannuation fund or retirement savings account by the SG quarterly due date. You must do this at least every quarter but some super funds will require you to contribute more often, such as monthly.
Check the ATO website for this financial year's super payment due dates.
Penalties for not paying super
There are penalties for not paying SG contributions on time or to the right fund.
- A Part 7 penalty may apply to late SG charge (SGC) statements. The maximum penalty is 200% of the SGC.
- If you make a false or misleading statement in your SGC lodgement, you may receive an additional administrative penalty. The penalty amount can be up to 75% of the SG shortfall.
What to do if you pay late or underpay super
If you do not pay an employee's super on time or to the right fund, you must:
- lodge a superannuation guarantee charge statement
- pay the SGC to the ATO
Visit the ATO website for more information on missed or late super payments.
Record-keeping requirements for super contributions
You'll need to keep a record of when and how you reported and paid all super contributions to your employees. Special reporting requirements apply to additional super payments made as fringe benefits or salary sacrifice.
You must also report in writing to your employees the details of the:
- contributions you've made to their super funds at least once every quarter
- name of the fund
- employee's account number, if known
Learn more about your requirements for keeping staff records.
Tax deductions for super contributions
You can claim deductions for contributions where the contribution is:
- to provide super benefits for your employee
- made to a complying super fund or Retirement Savings Account (RSA) in the year of income
Restrictions apply to tax deduction eligibility if you are required to pay the SGC for late or under payment of SG.