WHAT IS THE SUPERANNUATION GUARANTEE? |
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The superannuation guarantee scheme requires all employers to provide a minimum level of superannuation support in each financial year for their employees, subject to limited exceptions. The superannuation guarantee applied from 1 July 1992 under the Superannuation Guarantee (Administration) Act 1992 (SGAA).
Employers who fail to provide the prescribed minimum level of SG support are liable to an SG charge as well as additional penalties.
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WHO IS COVERED UNDER THE SUPERANNUATION GUARANTEE? |
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The SG scheme applies to all employers in respect of their full time, part time and casual employees, with limited exceptions.
In general terms an employer is someone who utilises the services of an employee. An employer may be an individual, firm, company, Government office, trust, non-profit organisation or even a non resident who has employees working in Australia.
In general terms an employee is a person who receives payment in the form of salary or wages in return for work or services performed, or payment for work under a contract for the person’s labour.
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Exempt employees for the superannuation guarantee |
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Employers are not required to provide SG support to the following exempt employees:
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Employees age 70 and over. |
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Employees paid less than $450 in a month. |
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Employees under 18 years of age and not working more than 30 hours a week. |
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Persons paid to do private or domestic work for not more than 30 hours a week for a non business employer. |
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Employees who already have vested benefits in excess of their pension RBL and have elected not to receive any more employer contributions (irrevocable election). |
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HISTORY OF THE SG CHARGE PERCENTAGE |
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Under the SG regime, an employer has been required to contribute the following minimum amount (expressed as a percentage of the employee's salary) to a complying superannuation fund, as illustrated in the table below:
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Charge Percentage % |
Financial Year |
Where employer's
base year payroll
is $1m or less |
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Where employer's
base year payroll
is above $1m |
2002/03 onwards |
9 |
|
9 |
2001/02 |
8 |
|
8 |
2000/01 |
8 |
|
8 |
1999/00 |
7 |
|
7 |
1998/99 |
7 |
|
7 |
1997/98 |
6 |
|
6 |
1996/97 |
6 |
|
6 |
1995/96 |
5 |
|
6 |
1994/95 |
4 |
|
5 |
1993/94 |
3 |
|
5 |
1992/93
(1 Jan 93 to 30 Jun 93) |
3 |
|
5 |
1992/93
(1 Jul 92 to 31 Dec 92) |
3 |
|
4 |
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NOTIONAL EARNINGS BASE |
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The minimum level of employer support is calculated by multiplying the SG charge percentage applicable to the employer by the employee’s notional earnings base. The earnings base will usually be specified in a super fund trust deed, a law, award or an agreement with the employee.
If there is no acceptable earnings base relevant to a particular employee, then a default earnings base equal to the ordinary time earnings of the employee will apply.
Payments that are not included in ordinary time earnings (hence not subject to the SG) include non-performance bonuses, (e.g. Christmas bonuses), overtime, benefits subject to FBT, workers' compensation payments where no work is performed, payments when on maternity or paternity leave, annual leave loading, redundancy payments and accrued leave payments on termination.
The notional earnings base of an employee subject to a maximum amount. Refer to Related Content below for the maximum contributions base thresholds.
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More about the Superannuation guarantee from the ATO's website
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