Navigating superannuation obligations for employers

Operating and managing a business demands significant attention, yet it’s imperative for business owners not to lose sight of your superannuation obligations.

Neglecting these obligations could lead to severe consequences, including liabilities, penalties, and even potential legal repercussions. In this article, we’ll provide some key information about superannuation obligations and updates that employers should keep in mind.

Choosing the right super fund

Upon entering the workforce, employees should have a designated super fund, either “stapled” by you, the employer, or a fund of their choice. However, if an employee is ineligible to select a fund, lacks a chosen option, or fails to notify you, the employer must contribute to an employer-nominated or default fund.

It’s essential that the chosen fund adheres to compliance standards set by superannuation law and is registered by the Australian Prudential Regulation Authority (APRA) to offer a MySuper product.

Certain super funds may require you to become a ‘participating employer’ before accepting contributions. This participation might entail more frequent super payments, such as monthly intervals instead of quarterly.

Superannuation thresholds

Recent changes in superannuation regulations have extended coverage beyond the $450 earnings threshold. Before 1 July 2022, employers were only required to provide superannuation to employees earning $450 or more per month before tax. However, now superannuation contributions are mandatory for domestic or private workers who clock more than 30 hours of work per week, regardless of their income.

The minimum amount of superannuation that an employer must pay to their staff in Australia is called the superannuation guarantee (SG).

Under the superannuation guarantee, employers have to pay superannuation contributions of 11% (from 1 July 2023) of an employee’s ordinary time earnings when an employee is over 18 years of age, or under 18 and works over 30 hours a week.

Payday super

Currently, the SG requires employers to make superannuation payments at least four times a year. However, from 1 July 2026, employers will be required to pay their employees’ super at the same time as their salary and wages. This will be known as ‘payday super’, as more consistent contributions will mean that superannuation funds should be better able to increase their compounding potential.

Employers can claim a tax deduction for super payments they make for employees in the financial year they make them. Contributions are considered paid when the employee’s super fund receives them.

Failure to fulfill obligations within the stipulated timeframe may attract the superannuation guarantee charge (SGC). Although the SGC remains ineligible for tax deductions, a delayed payment can be employed to mitigate the charge or earmarked as a pre-payment towards an upcoming super contribution, thereby securing tax deductibility.

Seek expert guidance

If you have concerns about fulfilling your employer obligations regarding superannuation, consider reaching out to our team of experts. Equipped with the knowledge and experience in this matter, we are ready to assist you in navigating the complexities of superannuation compliance and ensuring the financial well-being of your employees.

Contact KMT advisers now if you need assistance with your employer superannuation obligations!

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek tax advice from a qualified accountant at KMT Partners. Information is current at the date of issue and may change.