I'm a business looking for employee Superannuation solutions
Superannuation is money you pay for your workers to provide for their retirement. Generally, if you pay an employee $450 or more before tax in a calendar month, you have to pay Super on top of their wages.
The minimum you must pay is called the Super Guarantee (SG):
- the SG is currently 9.5% of an employee’s ordinary time earnings
- you must pay the SG at least four times a year, by the quarterly due dates
- you must pay and report Super electronically in a standard format, ensuring you meet SuperStream requirements
- your Super payments must go to a complying Super Fund – such as our AMG Corporate Super option - most employees can choose their own fund
- if you don’t pay the SG on time, you may have to pay the Super guarantee charge.
Things to consider...
Generally, if you pay an employee $450 or more (before tax) in a calendar month, you have to pay Super Guarantee (SG) on top of their wages.
If your employee is under 18 or is a private or domestic worker, such as a nanny, they must also work for more than 30 hours per week to qualify. For example, you will have to pay Super Guarantee (SG) on top of their wages for each week that the employee has worked more than 30 hours.
You have to pay Super for some contractors, even if they quote an Australian business number (ABN).
You pay Super no matter whether the employee:
- is full-time, part-time or casual
- receives a Super pension or annuity while still working – including those who qualify for the transition-to-retirement measure
- is a temporary resident, such as a backpacker or a working holiday-maker. When they leave Australia, they can claim the payments you made through the Departing Australia Superannuation payment (DASP) program.
- is a company director
- is a family member working in your business – provided they are eligible for SG.
If you engage someone to do work of a domestic or private nature for 30 hours or more per week and pay them $450 or more (before tax) in a calendar month, you have to pay SG for them. 'Domestic or private' means work relating personally to you (not to a business of yours), or work relating to your home, household affairs or family – such as a nanny, housekeeper or carer.
If you use funds from the National Disability Insurance Scheme (NDIS) to engage a carer or other domestic help, you may have to pay SG for these workers. This only affects people who choose to manage their NDIS plan themselves.
Employees not eligible for Super
You don’t have to pay SG for:
- non-resident employees you pay for work they do outside Australia
- some foreign executives who hold certain visas or entry permits (call 13 10 20 for information)
- members of the army, naval or air force reserve for work carried out in that role
- employees temporarily working in Australia who are covered by a bilateral Super agreement. You must keep a copy of the employee’s certificate of coverage to verify the exemption.
If you’re a non-resident employer, you don’t have to pay SG for resident employees for work they do outside Australia.
Employees who are eligible for Super, may also be able to choose the fund you pay into.
If they aren't eligible to choose or don't make a choice, you must pay their contributions into your employer-nominated or default fund.
When choosing how to pay Super, you'll need to ensure your solution meets the SuperStream requirements to pay and report Super electronically.
Before you offer your employee the option to choose a Super fund, you must nominate a fund that you will pay their Super into if they can't or don't choose their own fund.
This fund is your employer-nominated fund (also known as a default fund).
The Super fund you nominate must:
- be a complying fund (one that meets specific requirements and obligations under Super law)
- be registered by the Australian Prudential Regulation Authority (APRA) to offer a MySuper product.
With the significant growth in Self Managed Super Funds over the last decade it is easy to see that more and more employees want to take control of their Super. This is why at Super Equity we utilise AMG Super for their Flexible Solution.
AMG Corporate Super provides a low cost ‘MySuper’ compliant solution for employers combined with the flexibility that allows employees to take control over how their Super is invested.
AMG Super not only provides the flexibility for employees to have more control whilst remaining part of their employer plan but Super Equity advisers also:
- Provide employees with a complimentary Super Health Check
- Educate and advise employees on which investments are right for them
- Help employees roll all of their Super Funds into one place
To make sure your current fund meets relevant requirements, check with the trustee or an authorised representative of the fund.
Some Super funds may ask that you become a 'participating employer' before you can pay contributions to them. If you agree, you may have to make Super payments more regularly – such as monthly, instead of quarterly.
If you don't want to become a participating employer, talk with your nominated fund (or with the fund your employee chooses instead) to find out how best to make Super contributions for your employee.
It is illegal for a Super fund to give you benefits – for example, a free holiday, as an incentive to use their fund as your nominated fund.
It's not illegal for a Super fund to give benefits to your employees – such as financial literacy seminars or preferential death benefits, as an incentive for them to choose their fund.
Many employees are entitled to choose the fund employers pay their Super contributions into. As their employer, even if you have a preferred fund set up, you need to identify these employees and provide them with a Standard choice form so they can advise you of their chosen fund. You also need to nominate the default fund that you will pay their contributions into if they don't choose a fund, such as Super Equity’s AMG Corporate Super.
Step 1: Identify employees who are eligible to choose
When you employ new staff, check if they're eligible to choose a Super fund.
Your new employee is eligible to choose their Super fund if they are:
- employed under a federal award
- employed under a former state award, now known as a notional agreement preserving state award (NAPSA)
- employed under an award or industrial agreement that does not require Super contributions
- not employed under any state award or industrial agreement (including contractors who are regarded as eligible employees for Super purposes).
If you're not sure what, if any, award or industrial agreement covers your employee:
- visit the Fair Work website at fairwork.gov.au
- phone the workplace relations department in your state or territory
- check with your employer association.
As of 1 July 2015, you don't need to offer a choice of fund to employees:
- whose Superannuation fund undergoes a merger or acquisition
- on a temporary working visa.
However, your employee retains the right to request a standard choice form from you.
Step 2: Provide a standard choice form
You must provide employees who are eligible to choose a Super fund with a Standard choice form (or equivalent) within 28 days of their start date, unless they give you details of their chosen fund first.
You don't have to use the Standard choice form, but any alternative document must cover all the information that the Standard choice form covers.
Pre-filled Standard choice forms can now be completed by employees through ATO online services linked to myGov. You'll need to give your employee the following information:
- your employer Australian business number (ABN)
- their employment type (for example, full time, part-time, casual)
- your default Super fund details
- unique Superannuation identifier (USI)
Existing eligible employees are entitled to change their choice of fund as often as they want to, but you only have to accept a new choice from them once in any 12-month period. If your employee asks for a choice form you have 28 days to provide it.
You need to keep a copy of the completed Standard choice form or ATO online printed summary for your own records for five years. You don't have to send a copy to the ATO or to your employee's chosen Super fund.
You also have to give an employee a Standard choice form within 28 days if you:
- can't contribute to their chosen fund or it's no longer a complying fund
- change your employer-nominated fund and you're paying the employee's contributions into that fund.
Step 3: Pay into your employer default fund until the choice form is returned
If your employees don't choose a fund or haven't provided the necessary information, and a Super contribution is due, you must make the payment for them into your employer-nominated fund by the due date.
Step 4: Act on your employee’s choice
Once an employee advises you of their choice of Super Fund, you have two months to start paying contributions into that fund.
You may be penalised if you don't offer your eligible employees a choice of fund or you don't pay their Super to their chosen fund.
You can give your employees factual information about:
- what choosing a Super Fund is about
- the process of choosing a Super Fund
- your obligations
- what they can do to nominate a Super Fund as their chosen fund.
But unless you're licensed by the Australian Securities & Investments Commission (ASIC) to provide financial advice, you must not make comments, recommendations or give advice to employees about:
- the Super Fund they should choose
- the level of their Super contributions
- whether they should consolidate their Super.
You can suggest your employees contact ASIC directly to find out more about comparing and choosing Super Funds:
- visit the ASIC website moneysmart.gov.au
- phone ASIC on 1300 300 630.
If your employee gives you their tax file number (TFN), you must give it to their chosen Super Fund the next time you make a payment for them to that fund.
If you receive the TFN less than 14 days before you are due to make a payment, you have 14 days to give the TFN to the fund.
There are penalties if you don't pass an employee's TFN to their fund. It's also your responsibility to ensure that third parties you engage pass TFNs on to Super funds.
Employee's personal Super contributions
Super Funds can't accept personal contributions from employees if they don't have the employee's TFN. If you have an employee who wants to make personal Super payments as a payroll deduction, check you have given their TFN to their Super Fund.
You must keep records that show:
- how much Super guarantee (SG) you paid for each employee and how it was calculated
- that you have offered each eligible employee a choice of Super fund.
You can use whatever method suits you best to keep these records, but:
- Your records must be written in English (or in a format that can be easily accessed and converted into written English).
- You must keep the records for five years.
- If you keep electronic records, software must be available to access older floppy disks, CDs and computer records.
Even if you use a clearing house to distribute Super to your employees' funds, you're still responsible for keeping adequate records of Super guarantee payments.
Keep these records:
- Evidence that you've given the Standard choice form to all eligible employees – for example, emails if you issued the form that way – and the written information your employee provided when they nominated their chosen fund.
- Details of employees you don't have to offer a choice of Super Fund to.
- Confirmation that your nominated (default) fund offers a MySuper product.
- Receipts or other documents issued by the fund showing you've made Super contributions for that employee.
Discover how Super Equity’s AAA Independently rated Super Fund in conjunction with a Super Equity Adviser can help your employees grow their Super Wealth faster – contact us today.
NOTE: Any advice or information in this article is of a general nature only and has not taken into account your personal circumstances, needs or objectives, therefore, before acting on the advice, you should consider its appropriateness to you, having regard to your objectives, financial situation or needs.