Here are a few things to know about setting up your employees’ super and making contributions.
Who's eligible for contributions
By law, you have to take care of your employees by paying super contributions on their behalf.
These contributions:
- are usually referred to as Superannuation Guarantee (SG) Contributions
- are typically 10% of your employee’s salary or ‘ordinary times earnings’ (ordinary hours of work)
- could include award payments, bonuses, commission and allowances
Here are some checklists to help you determine when you need to pay SG contributions.
Employees
- Do you employ a person on a full-time, part-time or casual basis?
- Are they over 18?
- Are they paid $450 (before tax) or more in a calendar month?
If you said yes to all, then you need to make a SG contribution. There may be other situations where you are obliged to make super contributions and you should always check your obligations with the ATO (for example, if your employee is under 18 but working more than 30 hours per week, you may be obliged to pay contributions on their behalf).
Contractors
- Are you hiring the contractors primarily for their labour?
- Are they carrying out the work themselves (ie. not free to engage others)?
If you said yes to all, then you may have to pay their superannuation contributions, even if they quote an Australian Business Number (ABN).
Contributions if you're self-employed
Self-employed people can choose whether or not they would like to pay themselves superannuation. If you’re self-employed, you may want to think about super as a way of saving for your future. In most cases, self-employed people can claim a full tax deduction on contributions made up to age 75.
See the Australian Taxation Office (ATO) website for information on claiming deductions for personal super contributions.
Super may not be at the top of your priority list if you're self-employed but it pays to give it some thought. Putting super money away now could make all the difference to your retirement future.