Superannuation guarantee matters

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.

The SG rate started at 3% (for the majority of employers) and built to 9%, up to 1 July 2013.  Employers paid the SG based on the ordinary time earnings of their employees who are aged over 18.  The system applies to part-time and casual employees and who are paid $450 (before tax)* a month.  These SG contributions are to be paid into a complying superannuation fund or retirement savings account. The rate increased to 9.25% from 1 July 2013 and will continue to rise as noted in table below.

*Note: amendment to the scheme has seen this minimum amount removed.  Currently, all employees should be receiving SG contributions at the relevant rate, for all employment.

Employers with fewer than 20 employees can pay their compulsory superannuation contributions to the Small Business Superannuation Clearing House (SBSCH).   The SBSCH is administered by Medicare Australia.

Employers not paying the correct superannuation contributions by the due date incur a penalty 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.

• The former age limit on employees for whom employers have SG obligations has been removed.
• 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:

Note: the Coalition government elected during September 2013 has indicated a slowing in the phase-up process. These changes, reflected in the above Table, should be monitored against the ATO-published Table.

The Superannuation Guarantee Legislation

The Superannuation Guarantee (Administration) Act 1992 is the primary legislation affecting employers.  It details the administrative arrangements for the operation of the Superannuation Guarantee (SG) scheme.  Features of the scheme include assessment of employer liability, and calculation of the SG charge.  How payment of the charge is to be made – and how it is distributed are covered as well.

The Superannuation Guarantee Charge Act 1992 imposes a charge on employers who do not provide the required level of superannuation payments.

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 2024.