Superannuation Guarantee: An Employer's Guide to Australian Super Obligations

The Superannuation Guarantee (SG) is Australia's compulsory employer-funded retirement savings system. Every Australian employer who pays wages is required to contribute a percentage of those wages to each eligible employee's super fund. As of 1 July 2025, that percentage is 12%, the final stage of a legislated increase that started below 10% over a decade ago.

Two years ago, the SG was a quarterly payment with relatively forgiving timing. From 1 July 2026, it becomes Payday Super: contributions must be made at the same time as wages, with funds reaching the employee's super account within seven business days. This is the single biggest structural change to Australian payroll in a generation, and small businesses that plan late for the transition will be paying penalties instead of super.

This guide covers the current SG rate, who is eligible, how Payday Super changes operations from 1 July 2026, and the penalties that apply when contributions are missed or late. For the wider Australian HR landscape (NES, Fair Work, modern awards), see our Australia HR guide.

The current rate

From 1 July 2025, the Superannuation Guarantee rate is 12% of ordinary time earnings. This is the statutory minimum the employer must contribute on top of the employee's wages.

The 12% rate is the final step of a legislated phase-in that began in 2014. The rate history:

Period	Rate
1 July 2014 to 30 June 2021	9.5%
1 July 2021 to 30 June 2022	10%
1 July 2022 to 30 June 2023	10.5%
1 July 2023 to 30 June 2024	11%
1 July 2024 to 30 June 2025	11.5%
From 1 July 2025	12%

12% is now the steady-state rate. There are no further legislated increases.

Ordinary time earnings (OTE)

SG is calculated on ordinary time earnings, not total wages. OTE includes:

• Ordinary hours salary and wages
• Commissions
• Shift loadings
• Allowances (most, but not all)
• Bonuses (in certain cases, when they relate to ordinary hours)

OTE does not include:

• Overtime payments
• Reimbursements of expenses
• Fringe benefits
• Workers compensation payments (in some circumstances)
• Lump-sum termination payments that are not ordinary earnings

The distinction matters because paying SG on total wages overpays, and paying only on base salary underpays. For most employees the practical difference is small, but for high-overtime roles (mining, hospitality, construction), the OTE calculation can vary materially from total wages.

Who is eligible

Most employees aged 18 or over are eligible for SG regardless of hours worked. The old $450-per-month minimum threshold was removed in 2022, so you now owe SG from the first dollar of wages paid.

For employees under 18, SG applies if they work more than 30 hours per week.

Contractors who are primarily contracting for labour (not for a result or a delivered product) are treated as employees for SG purposes even if they are otherwise contractors for tax. This is a common trap for small businesses using ABN-contractors for ongoing roles; SG obligations can still apply.

Maximum contribution base

SG is capped at the maximum contribution base, which is set per quarter. For the 2025-26 financial year, the maximum contribution base is $62,500 per quarter (roughly $250,000 annualized).

For an employee earning above the maximum contribution base, SG is calculated on the base, not the full salary. A Sydney CTO on $300,000 a year has SG calculated on $250,000, not $300,000.

The maximum contribution base is indexed annually with average weekly ordinary time earnings, and the ATO publishes the new threshold before each financial year.

Choice of super fund

Employees can choose their own super fund. When a new employee starts:

1. The employer asks the employee to nominate a fund (typically via a Standard Choice form)
2. If the employee nominates a fund, contributions go there
3. If the employee doesn't nominate, the employer checks whether the employee has an existing stapled super fund (via the ATO's online services)
4. If there's a stapled fund, contributions go to that
5. If there's no stapled fund, contributions go to the employer's default fund

Stapling was introduced in 2021 to stop employees accumulating multiple funds (and multiple sets of fees) each time they changed jobs. As an employer your obligation is to check for a stapled fund through the ATO before defaulting a new hire to your employer-nominated fund.

Payday Super from 1 July 2026

This is the biggest change to SG in a generation. From 1 July 2026, every employer must pay super contributions at the same time as wages, and the contribution must reach the employee's super fund within seven business days of payday.

The practical implications:

Frequency of payment. Where SG has been quarterly, it becomes per-payroll. If you run weekly payroll, you make 52 super payments a year. If fortnightly, 26. If monthly, 12.

System readiness. Your payroll and accounting systems need to support the new cadence and the new data standard. SuperStream 3.0 (the replacement messaging standard) goes live on 1 July 2026 alongside Payday Super. The ATO's Payday Super page has the detail on system requirements.

Payment method. The New Payments Platform (NPP) has been approved as a valid payment method, which enables near-real-time payment to super funds. Your payroll system will need to either support NPP directly or route through a gateway that does.

Cashflow. Quarterly SG lets small businesses hold the cash between payroll and the next SG due date. Payday Super eliminates that cushion. If your cashflow management has depended on that 30-to-90-day float, you need to adjust.

Fund allocation. Super funds must allocate received contributions to the member's account within three business days of receipt. This tightens the end-to-end timeline substantially.

Penalties. Payday Super comes with increased penalty structures. Missed or late contributions trigger the Super Guarantee Charge (below) with 25% or up to 50% uplifts for repeated failures.

Plan the transition now if you haven't already. A payroll-system check and a cashflow model by Q1 2026 at the latest. Retrofitting on 30 June 2026 is not a position any small business wants to be in.

The Super Guarantee Charge (SGC)

If you miss the due date or underpay, the ATO applies the Super Guarantee Charge instead of normal SG. SGC is composed of three parts:

• The SG shortfall amount (calculated on total salary and wages, not OTE, so effectively a higher base)
• An interest component
• An administration fee (currently $20 per employee per quarter)

SGC is not tax-deductible, where normal SG contributions are. The practical cost of missing SG payments is meaningfully higher than just the underlying contribution.

Under Payday Super, the SGC framework is updated to reflect the new payment cadence, and penalties for repeat offenders can reach 50% on top of the base charge. The ATO has historically been willing to work with employers who self-correct; the posture toward employers who are forced into correction by audit is less forgiving.

Record-keeping for super

As part of the Fair Work Act record-keeping requirements and ATO obligations, employers must keep records of:

• Each SG contribution made, per employee, per period
• The fund the contribution was sent to
• The date of the contribution
• The period the contribution relates to
• The method of payment

These records must be kept for seven years (Fair Work) or five years (ATO), and the higher threshold applies. Our Fair Work compliance guide covers the broader record-keeping obligations.

Salary sacrifice contributions

Employees can choose to salary-sacrifice extra amounts into their super, typically in exchange for reduced take-home pay. Under the 2020 reforms, salary-sacrifice amounts cannot reduce the employer's SG obligation. In other words, if an employee sacrifices 5% of their salary into super, the employer still owes 12% SG on the original (pre-sacrifice) earnings, not 7%.

This was a significant change from earlier practice and closed a long-standing employer loophole. Every salary sacrifice arrangement needs to be documented clearly, and the employer's SG obligation should be calculated independent of the sacrifice amount.

A worked example

Let's walk through SG for a Brisbane employee earning $95,000 per year, no overtime, no commissions, standard hours.

Annual OTE: $95,000

Annual SG at 12%: $11,400

Monthly SG (for employers paying monthly): $950

Quarterly SG (under the current pre-Payday Super system): $2,850

Under Payday Super from 1 July 2026: $950 per month, paid at each payroll, with the contribution hitting the super fund within 7 business days of payday.

The true total employer cost for this employee, before any award allowances, is the $95,000 gross plus $11,400 SG = $106,400. Our payroll calculator runs the SG alongside PAYG tax and any applicable award rates in one pass, and the true cost of employment calculator covers the full employer-cost stack including SG and optional benefits.

Where SMB employers most often trip up

• Paying SG on base salary instead of OTE, missing shift loadings and commissions
• Paying on total wages (including overtime), over-contributing
• Not paying SG to contractors who are actually employees for SG purposes
• Missing the stapled super fund check for new hires
• Treating salary sacrifice as a substitute for SG (it isn't)
• Missing the quarterly deadlines under the old system (triggering SGC)
• Not planning for the Payday Super transition on 1 July 2026
• Using payroll systems that haven't updated for SuperStream 3.0

Super is usually the largest employer contribution on top of wages in Australia. A 1% error compounded across a workforce and multiple years is material money.

Key points

• The Superannuation Guarantee rate is 12% of ordinary time earnings, effective 1 July 2025
• SG is calculated on OTE, not total wages; overtime generally doesn't count
• Most employees 18 or over are eligible from the first dollar earned
• Maximum contribution base is $62,500 per quarter (2025 to 2026 financial year)
• Employees can choose their fund; otherwise check for a stapled fund before defaulting
• From 1 July 2026, Payday Super requires contributions per payroll with 7-business-day receipt at the fund
• SuperStream 3.0 replaces the current standard on 1 July 2026
• Super Guarantee Charge applies when SG is missed; non-deductible with interest and admin fees
• Salary sacrifice cannot reduce the employer's SG obligation

The Superannuation Guarantee is simple in principle and detail-heavy in execution. The 12% rate is settled; Payday Super is the transition that matters for small businesses in 2026. Get your payroll system and cashflow ready for 1 July 2026 and you're ahead of most of the market.