The information in this Superannuation Guarantee article replaces our original post from December 2009 and is largely drawn from the WorkplaceInfo website, who in turn, acknowledge that it is based on writings by Shirley Murphy, a Tax and Superannuation Consultant.
What is the Superannuation Guarantee scheme?
The Superannuation Guarantee (SG) is a compulsory system of superannuation support for Australian employees, paid for by employers. The system was introduced in 1992.
Following a stepped contribution phase over several years when the rate which started at 3% (for the majority of employers) and built to 9%, up to 1 July 2013 then, employers paid 9% of the ordinary time earnings of their employees (including part-time and casual employees) who are aged over 18, and who are paid $450 (before tax) a month, into a complying superannuation fund or retirement savings account. This rate increased to 9.25% from 1 July 2013 and will continue to rise over the next few years — as noted in table below.
From 1 July 2010, employers with fewer than 20 employees can also pay their compulsory superannuation contributions to the Small Business Superannuation Clearing House that is administered by Medicare Australia.
Employers who do not pay the correct superannuation contributions by the cut off date must pay a tax called the superannuation guarantee (SG) charge.
Percentage increase to minimum contribution
In the 2010 Federal Budget, the Treasurer announced important changes to the superannuation guarantee scheme.
- From 1 July 2013, there is no longer to be an age limit on employees for whom employers have SG obligations.
- The minimum SG contribution will increase from 9% to 12%, phasing in from 1 July 2013. The minimum contributions required to comply with the SG law will be:
| Year commencing | Minimum SG contribution |
| 1 July 2013 | 9.25% |
| 1 July 2014 to 30 June 2021 | 9.5% |
| 1 July 2021 | 10% |
| 1 July 2022 | 10.5% |
| 1 July 2023 | 11% |
| 1 July 2024 | 11.5% |
| 1 July 2025 | 12% |
Note: the Coalition government elected during September 2013 has indicated a slowing in the phase-up process. These changes have been reflected in the above Table, but it should be monitored to ensure current obligations are met: reference the ATO-published Table.
The Superannuation Guarantee Legislation
The Superannuation Guarantee (Administration) Act 1992 is the primary legislation affecting employers and details the administrative arrangements for the operation of the Superannuation Guarantee (SG) scheme, including assessment of the employer’s liability, calculation of the SG charge, payment of the charge and distribution of payments received.
The Superannuation Guarantee Charge Act 1992 imposes a charge on employers who do not provide the required level of superannuation payments for employees.
The superannuation contributions by the employer must be paid into a complying superannuation fund or a retirement savings account (RSA). Before 1 July 2006, employers could also contribute to the Superannuation Holding Accounts Special Account.
From 1 July 2010, employers with fewer than 20 employees can make their contributions to the abovementioned Small Business Superannuation Clearing House, which will forward the contributions to funds nominated by the employees or to the employer’s default fund. For the purposes of determining whether the employer has complied with SG obligations, the employer is treated as having made the contributions to the funds at the time it made the contribution to the clearing house.
The advisers at Continuum Financial Planners Pty Ltd have extensive experience with superannuation matters – including personal, employee and self-managed: your best interest could well be served by meeting with one of us. We are acknowledged for our process – ‘we listen, we understand, we have solutions’; call 07-3421 3456, or use the website Contact Us facility to arrange a consultation.
This article was originally posted in December 2009: it has been occasionally updated/ refreshed, most recently in July 2021.
