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The Super Payment: A Quick Guide for Employers

Managing super payments? Know that super payment compliance is not just about meeting legal requirements; it’s about securing your team’s retirement. Our guide cuts through the noise, giving you the latest rates, important deadlines, and streamlined processes for employers to maintain compliance and foster a secure financial future for your employees.

 

Key Takeaways

  • The Super Guarantee rate is set to hit 12% by 2025. Keep your contributions timely to avoid the Super Guarantee Charge.

  • Pay super to all eligible employees, whether they’re full-time workhorses or part-time dynamos.

  • Single Touch Payroll is your shortcut to super simplicity. Maintain accurate records, give your team their choice of super fund, and stay on top of your game to enjoy those tax deduction perks.

 

Understanding Super Guarantee Contributions

Step into the arena of Super Guarantee Contributions, where the game of financial diligence unfolds quarterly. For every employer in the know, making super contributions is far from a mere nod to generosity; it’s a legal must-do with its own playbook. At the heart of it, the super guarantee (SG) is the employer’s pledge to bolster their team’s retirement savings, and it sticks to a schedule as regular as your morning coffee.

Now, let’s unpack this. These contributions are the solid foundation of a retirement fund – essential and reliable, ensuring employees’ golden years are as secure as a bank vault. As set by the Australian Taxation Office (ATO), the current superannuation guarantee contribution rate is a sturdy 9.5% of an employee’s ordinary time earnings. But this isn’t set in stone; it’s on an upward trajectory, aiming for a peak of 12% by July 2025. This isn’t a spur-of-the-moment decision; it’s a deliberate strategy to bolster workers’ retirement funds far and wide.

 

Current Rate and Future Increases

If there’s one thing to expect in the realm of super contributions, it’s the winds of change. The Superannuation Guarantee (SG) rate is currently at a comfortable 11% for the 2023/24 financial year. That’s quite the jump from the 9.5% it was chilling at from 2014/15 to 2020/21. It then made a small hop to 10% in 2021/22, and a modest skip to 10.5% in 2022/23.

But don’t get too cozy just yet. This rate is on the move, aiming for 11.5% in 2024/25 and eventually hitting a firm 12% by the beginning of the 2025/26 financial year. These gradual increases might seem like a leisurely stroll up a hill, but they’re important milestones to pencil into your financial planner.

 

Who Qualifies for SG Contributions

In the world of work, super contributions are a must for everyone – whether you’re managing full-time experts, part-time pros, or the occasional freelancer. It’s the treasure that builds up over time, preparing employees for a comfortable retirement.

No more worrying about whether your part-time or casual staff earn enough to qualify for super contributions. Since July 1, 2022, the old rule that said they had to earn at least $450 a month is gone. Now, all eligible employees can enjoy the benefits of super, no matter how much they make. So, it’s important for you to keep up with the super payments for every member of your team, big or small, to help them save for the future.

Illustration of a super fund with multiple coins representing super contributions

 

The Essentials of Paying Super

Think of SG contributions as your employees’ VIP passes to their dream retirement. As their boss, it’s your job to hand out these passes on time. But there’s more to it than just giving them out. If you miss a payment, there could be fines—nobody wants unexpected costs.

These payments are due every three months, just like your favorite TV series. And in today’s digital age, SuperStream has made old-fashioned paperwork a thing of the past.

 

Choosing the Right Fund for Your Employees

Selecting a super fund for your employees is straightforward. Consider these points:

  • Every eligible employee has the right to choose their own super fund.

  • Have a default fund ready for those who do not make a choice.

  • Certain industrial awards may dictate contributions to a specific fund.

While you may have preferences, remember that your role is to provide information, not advice, unless you’re a licensed financial advisor. Provide the options, confirm the fund complies with regulations, and allow your employees to make their own choice.

 

Stapled Super Fund Details

Ever come across the term ‘stapled super funds’? Basically, it’s a super account that sticks with an employee throughout their career, no matter how many times they switch jobs. Since November 1, 2021, it’s been crucial for you, the employer, to get these stapled super fund details from the ATO when a new employee hasn’t picked a super fund.

You really don’t want to miss this step, as it could lead to fines. So before you start the payroll, make sure you’ve either got their stapled super fund details or you’re ready with your default fund if they haven’t made a choice. This way, you’re all set to make super contributions to the right place.

 

 

Compliance with Quarterly Super Due Dates

Mark your calendars and set your alarms; timing is everything when it comes to SG contributions. Picture it as a series of delicate dominoes – one late tap and the whole sequence could tumble down, leaving you with the mess of the Super Guarantee Charge (SGC) and a dance card full of penalties. That’s why paying super contributions to the employee’s super fund is crucial by the quarterly super due dates. These dates are not mere suggestions; they’re as firm as the grip on a handshake deal.

The due dates are like the seasons – they arrive predictably every year, 28 days after the end of each quarter. But if one of these dates falls on a weekend or public holiday, the fund must receive the contribution on or before the next business day. Miss the mark, and you’ll have to lodge an SGC statement and pay the SGC – and unlike your employees’ super, these are not tax deductible.

 

Streamlining Payments with SuperStream

Enter SuperStream, the digital helper that makes it super easy for employers to handle super contributions. Think of SuperStream as a high-tech shortcut for sending money and information to super funds. It’s like having a powerful online tool that ensures you pay the right amount of super for your employees, and you do it quickly and accurately.

Say goodbye to old-school paperwork and checks – SuperStream is all about doing things electronically. Whether you’re using your company’s payroll system, a service that helps manage your super payments, or an online system provided by the super fund, SuperStream has got you covered. It lets you make payments to different funds all at once, which is like having a digital helper who makes sure everything is paid correctly and on time. Now, let’s look at all the good stuff SuperStream brings to the table.

 

Benefits of Using SuperStream

With SuperStream, you can make all your super contributions with one payment, so juggling multiple transactions like a circus performer is unnecessary.

On top of that, SuperStream has a knack for validating employee data, which means fewer errors and less back-and-forth with funds. Think of it as having a meticulous proofreader for your financial documents – one who doesn’t take coffee breaks. And when it comes to proving that you’ve met your super obligations, SuperStream provides audit-ready evidence of your timely contributions.

 

 

SuperStream Compliance with Xero

At Save My Books, we’ve streamlined the process of managing super contributions by harnessing the power of Xero’s SuperStream compliance feature: Auto Super. This tool is a game-changer for us and our clients, ensuring we meet our superannuation obligations easily and efficiently.

Xero, a cloud-based accounting software, offers an integrated SuperStream solution that allows us to submit super payments and employee information directly to the super funds. With Xero, we can batch payments for multiple employees across different super funds – all in one go. This saves time and reduces the likelihood of errors associated with manual data entry.

 

How Xero Makes SuperStream Simple

Xero’s Auto Super capability is designed with user-friendliness in mind, making it accessible even for those who aren’t tech-savvy. Here’s how it simplifies our superannuation process:

  • Automated Calculations: Xero automatically calculates the correct superannuation amounts for each employee, based on their earnings and the current SG rate.

  • Batch Payments: We can group all our client’s super payments into one batch, making it easy to manage and pay super for multiple employees simultaneously.

  • Compliance Checks: Xero performs compliance checks to ensure that the data sent to super funds meets SuperStream standards.

  • Record Keeping: Payment records are automatically stored within Xero, so we always have an audit trail and can easily provide reports to our clients or the ATO if required.

  • Easy Reconciliation: The reconciliation process is streamlined as super payments made through Xero are automatically matched against the corresponding payroll transactions.

 

 

The Save My Books + Xero Auto Super Advantage

By choosing Xero for our in-house SuperStream compliance, we provide clients with a seamless and integrated experience that reduces paperwork, saves time, and ensures accuracy. Our clients can rest assured that their super contributions are being managed professionally, allowing them to focus on growing their businesses.

With Xero, we’re not just meeting the SuperStream requirements; we’re exceeding them; all our bookkeeping packages provide a monthly service that adds value to our clients’ businesses and supports their employees’ journey to a secure retirement. Want to talk to us about how we can do the same for your business? Let’s chat.

 

Tax Deductions and Super Payments

For employers, claiming tax deductions for SG contributions is like getting a high-five from the taxman. However, this is not a free-for-all; you can only claim deductions for employer contributions, like those made under a salary sacrifice arrangement or other reportable employer super contributions, not the personal contributions made by the employee. Think of it as the difference between buying a round for your friends and them buying their own drinks – only the former gets you a pat on the back.

But beware, as late to the party payments will leave you with the Super Guarantee Charge (SGC), which is as non-deductible as popcorn at the movies. It’s the equivalent of missing your own surprise birthday bash – not only do you not get a slice of the cake, but you also have to clean up afterwards.

 

Handling Super for Different Types of Employees

Employees, from new hires to part-timers and casuals, each have unique super contribution requirements. All contributions should be based on paycheck dates, not the pay period. Some roles might need more frequent contributions, so stay on top of those.

 

Super for New Employees

Welcome new team members by promptly offering them the Superannuation Standard Choice Form. This needs to happen within 28 days of their start date. If they don’t pick a super fund and aren’t already attached to a stapled super fund, you’re responsible for channeling their super contributions into your default MySuper fund.

Once they’ve made their super selection, you’ve got a 60-day window to kick off the SG contributions into their chosen fund. Don’t forget to send over their tax file number to the super fund too—it’s a crucial piece of the puzzle. Make sure to document every step of this process and keep those records for at least 5 years. You’ll need them if the ATO comes knocking. Skipping any of these steps could lead to fines, and that’s a headache no one wants!

 

Super for Part-Time and Casual Employees

For part-time and casual workers, super contributions are a must and are based on their ordinary time earnings, which cover the usual pay plus any extras like bonuses, commissions, or allowances. If they’re under 18, they need to clock in at least 30 hours a week to get super. It’s key to tell apart the regular hours from overtime when working out super. If it’s unclear, then you’ve got to pay super on all the hours they’ve put in. Keeping your payroll on point is crucial to make sure every employee’s super contributions are spot-on.

 

Utilizing a Clearing House for Super Payments

Colorful illustration of a clearing house facilitating super payments

Imagine a service that simplifies the process of making super payments to multiple super funds for your employees. That’s exactly what a super clearing house does. The Australian Government provides a free online clearing house service through the ATO, which allows you to send super contributions at no extra cost.

Using a clearing house is efficient, but it’s important to ensure that the contributions are sent in time to meet the due dates. Late payments can result in penalties. It’s also your responsibility to check the processing times with your clearing house to ensure timely delivery to the super funds.

Additionally, a clearing house keeps a record of all your super contributions, which can be helpful for reporting and compliance purposes.

 

Eligibility for Free Clearing House Services

Now, who is eligible for the free clearing house service? Small business owners with 19 or fewer employees or with an annual turnover of less than $10 million can access the Small Business Superannuation Clearing House. This service acts as a financial assistant, helping to manage super payments efficiently and at no cost.

To use this service, you need to register your business details, employee information, and their super fund selections. You can access the Small Business Superannuation Clearing House through the Online services for business or ATO online services. Super contributions are considered ‘paid’ for the purpose of meeting your super guarantee obligations when they are received by the clearing house, which ensures timely and compliant super payments.

 

Record-Keeping and Reporting Super Contributions

Keeping track of your super contributions is super important. You’ve got to keep your records in English, and if they’re on a computer, make sure the ATO can check them if they need to. Hang onto those records for at least 5 years, just to be safe.

And don’t forget, you need to keep proof that you’ve given your employees their super fund options. It’s all about showing you’re on top of your game when it comes to super responsibilities.

 

Integrating with Single Touch Payroll

Single Touch Payroll (STP) simplifies how you report payroll information to the ATO. It automates the transmission of salary and wages, including salary sacrificed amounts, directly to the ATO with each pay event. This ensures accurate and timely reporting. Make sure to follow the STP reporting checklist provided by the ATO to avoid any mistakes.

 

Summary

Alright, let’s wrap this up with a quick recap. We’ve covered the ins and outs of Super Guarantee Contributions and how to handle super payments. We’ve highlighted the need to stick to those quarterly due dates and introduced SuperStream as a handy tool to make the whole process a breeze. We’ve touched on claiming tax deductions for super payments and what you need to do for different types of employees when it comes to their super.

 

Frequently Asked Questions

What’s this Super Guarantee I keep hearing about?

The Super Guarantee (SG) is like the golden rule of employer contributions. Currently, it’s set at 9.5% of an employee’s ordinary time earnings, but it’s hitting the gym and bulking up to 12% by July 2025. Skipping out on this can lead to the super guarantee charge (SGC) – and nobody wants that.

Can I just pay super directly to my employees?

Ah, if only it were that simple, right? Like slipping a twenty under the table. But no, super payments must be made into a legit super fund.

How do I start paying super for my employees?

First, give yourself a pat on the back for Googling this in the first place! Then, get your employees’ super fund details and use a super clearing house (like the ATO’s free service) to send the payments.

How often should an employer pay super?

Employers are required to pay super contributions at least once every three months to the employee’s nominated account. Don’t be tardy on those payments – the ATO will have a field day with your Super Guarantee Charge!

Can I pay super more often?

Absolutely, feel free to be an overachiever! Paying super more frequently can help manage cash flow and keep your employees smiling. Just make sure each payment is at least the minimum SG amount required. Here at Save My Books, we process our clients’ monthly super payments, so their cash flow is easier.

How do I know if I’m doing this super thing right?

Stay in tune with the ATO guidelines, use a super clearing house, and maybe whisper sweet nothings to your payroll software. But seriously, staying organised and keeping good records are your best bet. And when in doubt, a chat with someone in the know, like…*cough, cough* us! Save My Books. Our bookkeeping packages ensure your super obligations (and all your business financial matters) are kicking along compliantly, so you can focus on your business.

Picture of Stacey, Registered BAS Agent and bookkeeper, who provides bookkeeping services to small businesses all over Australia

Stacey Fulton

Boss Lady / BAS Agent

Hey, I’m Stacey, I’m a fan of karate and big beefy muscle cars. But my major, stay-awake-till-3am obsession… is other awesome small biz owners. We ‘get’ each other. I mean, let’s face it. This gig; running a business… it’s empowering and exhilarating. But man, it’s also painful and lonely at times. A kind of pain that our non-small business friends don’t always ‘get’.

In a previous life, I was a corporate gal. Clad in my business suit and sporting a mouthful of technical jargon, I was set to climb the proverbial ladder of the accounting world. And I didn’t do too bad. Then I had kids. Lots of them. Turns out, the corporate world wasn’t a fan of big families and I wasn’t a fan of the corporate world. So I packed up my mundane little cubicle and fell face first Fat Amy style into the world of small business. Save My Books was born.

Don’t go it alone, it’s no fun. And business should be fun. Grab a few squares of chocolate *who am I kidding, grab the block*, and peruse some of the content I’ve put together for you. Or, if you’re time poor like me, save the reading, let’s chat for real over Zoom.

Until then.

Stacey

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March 20, 2024

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Stacey Fulton, numbers nerd and tradie bookkeeping specialist, sitting on white steps

Hi, I’m Stacey Fulton, Chief Bean-Counter and BAS Agent at Save My Books. Together with my small (but mighty) team, we help small businesses understand their finances, so they can build sustainable thriving businesses – minus the overwhelm.

Our main goal? To be real people, that have real conversations (minus the jargon), leading to real results. See, our team are all business owners ourselves, so we understand the pressure that small businesses can put on families because we experience it ourselves. Every. Single. Day.

We want more for you. We want you to spend your Sundays enjoying life, not catching up on bloody bookwork and financial tasks. We want to help.

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