How do you pay superannuation?

Superannuation is paid by employers to employees, in both small and large businesses. Employees can also choose to make their own additional super contributions to help fund their retirement lifestyle. 

If you’re an employer

Employers are required to pay superannuation to all their staff if the staff are:

• Over 18
• Under 18 and work more than 30 hours per week

This applies even if the staff are casual employees, part-time employees, contractors (provided the contract is mainly for their labour) or temporary residents.

The Superannuation Guarantee (SG) rate is 10.5 per cent in the 2022-23 financial year and is scheduled to rise each year until it reaches 12.0 per cent in 2025-26.

Employers can pay superannuation to employees electronically via SuperStream or Single Touch Payroll. The employer’s contributions must be paid into either the employee’s chosen fund, stapled fund, or into the employer’s default fund.

Employers must pay superannuation at least four times per year. The due dates are 28 January, 28 April, 28 July and 28 October.

If you’re an employee

As an employee, you can also make your own contributions to your superannuation on top of your employer’s contributions. These could be concessional contributions or non-concessional contributions.

Concessional contributions are pre-tax contributions, sometimes known as a salary sacrifice. This is where you arrange with your employer to have part of your salary paid directly into your chosen superannuation fund, bypassing your bank account altogether. These contributions may be taxed at a lower rate, and as this effectively lowers your income, it could also affect your income tax returns.

Because concessional super contributions are paid from your pre-tax income, you’ll need to contact your employer if you want to work out a salary sacrifice arrangement.

Non-concessional contributions are made by depositing money from your after-tax income into your super fund. Because you’ll have already paid tax on this money, you may be able to claim a tax deduction for making non-concessional super contributions. Keep in mind that the Australian Taxation Office (ATO) puts a cap on the maximum amount of non-concessional contributions you can make each financial year.

You can make non-concessional contributions much like transferring money from one bank account to another. This could use familiar payment systems such as electronic funds transfers, BPAY, or even a cheque.

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