1.3 Super Guarantee (SG) rates

Australian law requires all employers to provide a minimum level of superannuation for their employees at the prevailing Super Guarantee (SG) rate, based on the employee's ordinary time earnings (OTE), which must be paid to a complying super fund.

The SG payment rate is legislated to increase to 12% by 1 July 2025 as follows:

Super Guarantee rates

Salary sacrifice contribution cannot be considered part of a super guarantee contribution 

From 1 January 2020, a salary sacrifice contribution could no longer be considered part of a super guarantee contribution made by the employer. For instance, if an employee elects to salary sacrifice 5% into their superannuation fund, the employer will still be required to pay the prevailing SG rate of the employee's ordinary time earnings (OTE) base, into the employee's super fund to avoid the super guarantee charge.

Source: Rainmaker Technical Services 2024

This technical resource is intended for the use of financial advisers only. It is current at the date of publication but may be subject to change. This publication has been prepared without taking into account a potential investor's objectives, financial situation, needs or objectives. Before making a recommendation based on this material, you should consider its appropriateness based on the client's objectives, financial situation and needs. Rainmaker Group is not a registered tax agent under the Tax Agent Services Act 2009. Your client should refer to a registered tax agent before relying on information published herein that may impact their tax obligations, liabilities or entitlements.

1.4 Timing of SG contributions & the Superannuation Guarantee Charge (SGC)

A contribution must be made no later than 28 days after the end of each quarter^, as shown in the following table.

^Note: 'Payday super' proposal - It is proposed that from 1 July 2026, employers will be required to pay their employees' super at the same time as their salary and wages.

• When a due date falls on a weekend or public holiday, payment can be made on the next working day. The ATO will also accept payments from employers more regularly than quarterly if they desire (for instance, fortnightly or monthly) as long as their total SG obligation for the quarter is paid by the due date.
• If an employer has not paid the minimum amount on time and to the correct fund, they must lodge a 'superannuation guarantee charge statement' and pay the superannuation guarantee charge (SGC).

The Superannuation Guarantee Charge (SGC)

Employers who do not pay superannuation contributions for an employee for a quarter are liable to pay a penalty via the superannuation guarantee charge. The charge (not tax-deductible) is made up of:

• SG shortfall amounts based on the employee's AWOTE plus overtime
• Interest on the amount (at 10%)
• An administration fee of $20 per employee, per quarter

This technical resource is intended for the use of financial advisers only. It is current as at the date of publication but may be subject to change. This publication has been prepared without taking into account a potential investor's objectives, financial situation, needs or objectives. Before making a recommendation based on this material, you should consider its appropriateness based on the client's objectives, financial situation and needs. Rainmaker Group is not a registered tax agent under the Tax Agent Services Act 2009. Your client should refer to a registered tax agent before relying on information published herein that may impact their tax obligations, liabilities or entitlements.

1.5 Maximum super contributions base

The maximum super contributions base is used to determine the maximum limit on any individual employee's earnings base for each quarter of any financial year.

Employers do not have to make SG contributions for the part of earnings above this limit:

The maximum super contributions base is indexed in line with AWOTE each income year. The new indexed amount is generally available each February.

1.6 Employment related payments (ETP)

What is an ETP?
When you leave work or change jobs, you may receive several lump sum payments. The tax you pay on these lump sum amounts is different to the tax you pay on your normal income. One lump sum may be an employment termination payment (ETP).

Genuine redundancy and early retirement scheme payments

Employment Termination Payments (ETP)

ETP Cap

*Includes Medicare levy and an ETP must generally be made within 12 months of terminating employment in order to qualify for lower tax rates