The Superannuation Guarantee (SG) is the compulsory amount that an employer must pay into the default or nominated superannuation fund in respect of an employee as part of their employment conditions.
The Superannuation Guarantee Charge (SGCC Superannuation) is a penalty payable by the employer if the mandatory Superannuation Guarantee (SG) payment is not made by the due date and/or not paid into the employee’s nominated fund.
The Superannuation Rate or SG Rate required to be paid is calculated as a percentage of the employee’s wage.
Detailed below are the past, present and future SG rates
|Financial Year||SGC Superannuation Rate (%)|
Maximum SG Payments
|Year||Quarterly Income||Annualised Amount|
|2017-18||$52 760||$211 040 p.a.|
|2016-17||$51 620||$206||480 p.a.|
|2015-16||$50 810||$203 240 p.a.|
|2014-15||$49 430||$197 720 p.a.|
|2013-14||$48 040||$192 160 p.a.|
For more information about the Maximum Contribution Base, please click here.
This means that SG payments are not required to be made on the income that exceeds the above quarterly income amount.
For example, if a person was on an annual salary of $200,000 p.a., paid in equal amounts of $50,000 per quarter, the maximum SG that the employer would be required to make is $18,783.40 p.a. in the 2014-15 financial year. This is calculated as $49,430 x 9.5% x 4
Due Dates for SG Payments
|SGC Superannuation Quarter||Payment Due Before|
|1 July – 30 Sept||28 October|
|1 Oct – 31 Dec||28 January|
|1 Jan – 31 Mar||28 April|
|1 April – 30 Jun||28 July|
Tax On SGC Superannuation Contributions
SG Employer contributions are a Concessional Contribution. All Concessional Contributions incur Contributions Tax of 15%. However an additional 15% tax is payable on Concessional Contributions for high income earners….. read more.
The following is a list of circumstances where SG payments are not required to be made by an employer
- Under age 18 – Part time employees working less than 31 hours/week
- An employee is paid less than $450 in one month
- Resident employees paid by non-resident employers for work completed outside of Australia (unless covered under agreement)
- Non-Resident employees paid for work completed outside of Australia
- Employees paid for work on a private or domestic basis for less than 31 hours/week, such as a gardener, housekeeper, nanny, etc.
Age Limit for SG Contributions
There is no longer an age limit for employees to be eligible for SG contributions.
SG Contributions on Salary Sacrificed amounts
An employer is not required to make Superannuation Guarantee payments on amounts that are salary sacrificed to superannuation. This is because SG requirements are made in respect of an employees’ Ordinary Time Earnings (OTE). OTE’s are effectively reduced when a salary sacrifice arrangement is entered into by the amount that has been salary sacrificed.
In saying this, the employer is not prohibited from making SG contributions on the amount salary sacrificed.
Contributions tax also needs to be considered.
Superannuation Guarantee Charge (SGC Superannuation)
SGC Superannuation payments are payable if the employer has not made the required SG payment into the nominated superannuation account by the cut-off date.
In such an instance:
- Interest is payable on the unpaid SG amount of 10% p.a. and an administration fee is also incurred. However, in these cases, the SG amount is calculated on the employee’s wages, as opposed to their OTE
- Other penalties may apply
- SGC payments are generally not a tax deductible expense to the employer (unlike SG contributions)
Choice of Fund
Certain employees are able to choose where their SG contributions are made using a Superannuation Choice Form. i.e. they are not restricted by the preferred or default fund of the employer.
However, many employees such as government employees, defined benefit members or employees under certain employment agreements may be unable to choose their own fund.
You should discuss this with the relevant personal at your place of employment or inquire with the Australian Securities and Investment Commission (ASIC) if you are still unsure.
If you would like anything clarified or have any further questions about SGC Superannuation or any other topics, please do not hesitate to leave a comment in the section below and I will endeavour to respond within 24 hours.