The Superannuation Guarantee (SG) legislation is a Government initiative designed to provide most employees with a minimum level of superannuation to help them save for their retirement.
The Australian Taxation Office has announced it will be targeting cafes and restaurants in 2013/14 to ensure Superannuation Guarantee payments are being made on time.
Employers that don’t meet their obligations are liable for a Superannuation Guarantee Charge which is made up of the SG shortfall amounts (including any choice liability), interest at 10% per annum, and an administration fee of $20 per employee per quarter. So it’s worthwhile taking some time to make sure you understand and meet your legal obligations.
Which employees are eligible for SG contributions?
By law, as an employer, you’re required to make SG contributions (payments) on behalf of most employees if they:
- Are over 18 (inclusive).
- Earn $450 or more (before-tax) in a calendar month, or earn $350 or more in a calendar month if an employee is under the Hospitality Industry (General) Award (HIGA) or Restaurant Award.
- Are under the age of 18 and work 30 hours or more in a week and earn more $450 or more (before-tax) in a calendar month.
- Are employed on a full-time basis, part-time or casual basis (including those who are working in Australia temporarily).
For a complete list of employee categories excluded from SG contribution requirements, please refer to our Employer Guide. You may be required to pay SG contributions despite any exclusions if a contract, award or other enforceable industrial instrument or arrangement require you to do so.
Please contact your employer association or Fair Work Ombudsman for details.
How much do you need to pay?
The SG law requires you to pay a minimum of 9.25% of an employee’s notional earning base.
For most employees’, the notional earnings base is pay for their normal working hours (excluding overtime) and is usually called ordinary time earnings (OTE).
OTE also includes shift loading, commissions, bonuses and casual loadings in some cases. Some employees’ earning bases are contained in awards, industrial agreements, laws of the Commonwealth, States or Territories, or in pre-existing trust deeds or other rules of applicable employer sponsored super schemes. This can mean that some employees are paid lower superannuation contributions as a proportion of total remuneration.
Employers must contribute 9.25% of an employee’s OTE, so that all employees earning the same amount get the same SG.
For more information, visit the ATO website.
Determining the super contribution amount for each eligible employee
Simply multiply the employee's earnings base by the SG rate to determine how much you need to contribute.
- Sarah. Sarah is 27 and works 30 hours a week as a hotel receptionist. This month she worked 120 hours at $26 per hour, which equals $3,120. Her employer must contribute 9.25% super (9.25% x $3,120), which is $280.80 for the month.
- Sam. Sam is 20 and works on a casual basis at a bar and earns $14 per hour. Last month he worked 30 hours and earned $420. His employer did not need to make a contribution that month as he was paid less than $450. This month however, Sam worked 40 hours and earned $560 so his employer has paid $50.40 (9.25% x $560) to Sam's super account. (Note: Some Awards may specify a lower threshold.)
Providing your employee's Tax File Numbers (TFN's)
The ATO may fine you to $1,100 if you’re late providing an employee’s TFN.
When an employee starts working for you, they usually complete a Tax File Number declaration form that contains their TFN. Once they give you this form, you must pass their TFN to HOSTPLUS within 14 days of the employee giving you this form, or when you make the first SG contribution on their behalf, unless they specifically request you not to.
If you don't provide their TFN, your employees will pay an extra 31.5% in tax on their employer contributions for the year. They will also not be able to make personal contributions and therefore could also miss out on a government co-contribution. You can also provide your employees' TFNs when making a contribution on their behalf.
Submitting your contribution details
There’s a few ways you can submit your contribution details along with your payment:
Use your computerised payroll system
Super FileManager is a PC-based option that extracts contribution information from over 60 compatible payroll systems. We also offer a Microsoft Excel® option for organisations with incompatible payroll systems.
Log in to SuperSite
SuperSite is an internet-based option that allows you to submit your contribution details securely online.
Complete a contribution payment advice form
Contribution advice is a paper-based option. Each month, a contribution advice form will be sent to you to complete and return with your cheque payment.
For detailed information about which contribution and payment method may be best for you, please call us on 1300 HOSTPLUS (1300 467 875).
Ceasing your payments
No payment this month?
If you don’t need to make a payment (i.e. you have no eligible employees employed during a particular period), please contact us to let us know. We’ll add a note to your account for that period so we know not to expect your payment.
Suspending your payments for up to 12 months.
Maybe you’re not taking on any employees for a while or your business is seasonal. If you need to suspend your super payments, we can deactivate your account for 12 months. If you need to resume payments at anytime before the 12 months is up, just submit your payment and contact us for your account to be reactivated. After 12 months your suspended account will reactivate automatically.
Close your account
If you’ve sold your business, closed down or just have no employees you need to contribute for, you can contact us to permanently ‘cease’ or close your account. If you’d like to make payments to HOSTPLUS again, you’ll need to join.
These steps will ensure you don’t receive any penalties for missing super payments.