The Superannuation Guarantee (SG) provides for a level of employer sponsored superannuation support for employees through regular contributions into a complying superannuation fund. These benefits must be fully vested in the member and are preserved until the member satisfies a condition of release.
Under the SG your employer is obligated to contribute a percentage of your wage/salary (Ordinary Time Earnings) up to a maximum contribution income base (see table on ‘Super Guarantee’ Factsheet) to a regulated superannuation fund or RSA. The maximum annual SG payment employers can make is equivalent to the concessional contribution cap, currently $25,000.
Employers have to provide a minimum level of support for all employees except:
- employees who are paid less than $450 (before tax) in the calendar month;
- employees under 18 years of age who are working for 30 hours or less per week;
- certain employees in their capacity as members of the Defence Reserve Forces;
- non-resident employees who are paid solely for work undertaken outside Australia;
- resident employees who are employed by non-resident employers and are paid solely for work undertaken outside Australia;
- certain overseas executives working in Australia;
- employees paid for work of a domestic nature of 30 hours or less in a week;
- employees receiving payments under the Community Development Employment Program;
- employees who chose not to receive employer contributions prior to the abolition of the Reasonable Benefit Limits; and
- employees temporarily working in Australia who are covered by a bilateral superannuation agreement.
Note: Payments not considered Ordinary Time Earnings, for example, overtime, are not used in determining the SG benefit.
Penalties exist for employers who do not comply with SG requirements. This is called the Superannuation Guarantee Charge (SGC). Employers who do not contribute the SG voluntarily are charged the amount of the contributions but will not receive any offsetting tax deduction. Penalty interest and administration fees also apply.