Know your super as an employer
Six tips to stay on top
Whether you’re an employer or an employee, it’s important to know the obligations a business has when it comes to paying super, because even a small error can become a big expense.
Knowing what you need to know
Most super funds, and especially Industry Super Funds such as TWUSUPER, have teams who can come out to a workplace and help employers understand the ins and outs of their super. But even before managers get that far, there are a few simple things they can do to help make sure they’re meeting their responsibilities.
Pay the right amount
Every employer should know they must pay super to their staff. The standard super payment is called the Superannuation Guarantee, and the amount is set by the Federal Government. Currently, it is 9.5% of ordinary time earnings (OTE for short). However, this is where it can get tricky. Not everything an employee earns is counted as OTE.
Payments counted towards OTE include:
- Base salary
- Shift loadings
- Regular annual leave
- Most bonuses
Payments not counted towards OTE include:
- Overtime bonuses
- Allowances for expenses
- Leave entitlement payouts
Also remember, super is compulsory. Private agreements can’t be used to get around it.
Pay the right people
It makes sense that businesses pay their permanent full-time and part-time staff super, as well as anyone on a set-term contract. However, other employees may also be entitled to super.
Casual staff may also be eligible for super where they:
- are over 18 years of age, and
- earn at least $450 per month before tax.
If a casual employee is under 18, they may still be entitled to super payments if they work 30 hours or more in a week and earn over $450 per month.
Contractors can, in some circumstances, be eligible too. Many employers make the mistake of assuming that external contractors don’t get paid super. But, where a contractor is personally doing the work for a client, the ATO may deem that contractor to be an ‘employee’ under superannuation law – even if they have an ABN and are paid via invoice. This is especially the case where the contractor takes instructions from the employer (or manager) as if they were any other worker in the company.
Pay on time
There are strict rules on when super must be paid. Employers who pay super at the same time as their employees’ wages will almost always be in the clear, and it’s generally the easiest and most foolproof way of keeping up to date.
It is possible however, to pay superannuation quarterly, as long as it is paid in full by the due date:
Q1 July – September – Due on 28 October
Q2 October – December – Due on 28 January
Q3 January – March – Due on 28 April
Q4 April – June – Due on 28 July
If payments aren’t made in full by the due date, businesses can be handed a fine known as the Super Guarantee Charge. And unlike super, the charge is not tax deductible.
To make sure super is paid correctly, many companies use a superannuation clearing house to handle super payments on their behalf.
Pay the right fund
It is important to remember that super must be paid into a ‘complying super fund’, not to the employee personally. Complying super funds are ones that meet the ATO’s fund requirements. If you have any doubts about a fund, you can check their status online or ask them for their statement of compliance – such as TWUSUPER’s Letter of Compliance.
Know and understand the relevant awards
When it comes to super, most industrial awards and workplace agreements are pretty similar, though there are sometimes special clauses about which fund an employee’s super needs to be paid into.
Some awards also stipulate the minimum amount of super that needs to be paid. This amount cannot be lower than the Super Guarantee.
Make sure your payroll software is up to date
A lot of errors can be avoided by making sure your payroll software is up-to-date and suitable for your business. At the very minimum, it should be able to handle the Single Touch Payroll system the ATO requires all businesses to have in place.
If you’re still unsure about any of your super obligations as an employer, give your default super fund a call. They usually have a team of experts who can either help you over the phone, or come out to your workplace in person.
If you’re not sure who your default fund is, TWUSUPER – the industry super fund for the transport sector – can help you out.
Claude Savino, TWUSUPER’s account manager for Tasmania, is ready to help. You can call him on 0400 502 583.
TWU Nominees Pty Limited ABN 67 002 835 412, AFSL 239163 (‘TWU Nominees’), is the trustee of TWU Superannuation Fund (TWUSUPER) ABN 77 343 563 307 and the issuer of interests in it. The information in this article is of a general nature only and does not take account any of your objectives, financial situation or needs. A copy of the current TWUSUPER Product Disclosure Statement should be obtained and considered carefully before you make any decision in connection with TWUSUPER.