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Common mistakes with Employer Super Obligations

The Australian Tax Office (ATO) runs education campaigns for business owners in the services industries to help them better understand their super obligations.

These are some of the most common mistakes employers make

The Most Common Mistakes

  • Not paying enough super
  • Missing the quarterly cut-off dates (28 October, 28 January, 28 April, 28 July)
  • Not understanding that sometimes they need to pay super for contractors, even if the contractor quotes an Australian Business Number (ABN)
  • Not keeping accurate super records
  • Not passing an employee's tax file number (TFN) on to their super fund
  • Not lodging a superannuation guarantee charge statement if they're late paying their employee super or don't pay enough super.

How do you pay and who do you pay it to?

Generally, employees are eligible for super if all of the following apply:

  • They are between 18 and 69 years old (inclusive)
  • They are paid $450 (before tax) or more in a calendar month
  • They work on a full-time, part-time or casual basis. Currently, employers need to contribute (as of July 2014) a minimum of 9.5% of their eligible employees' ordinary time earnings as a Super Guarantee to a complying super fund by the quarterly

What happens if I miss a payment deadline?

If employers are late paying their employees super or don't pay enough super, they must lodge a superannuation guarantee charge statement with the ATO. How do I treat Contractors? Employers need to pay super contributions for contractors they pay under a contract that is wholly or principally for the labour of that person - even if the contractor quotes an ABN.

Keeping good records

Employers must keep records that show

  • The amount of super they paid for each employee and how it was calculated;
  • That they have offered their eligible employees a choice in super fund;
  • How they calculated any reportable employer super contributions.
  • Remember to pass on your employee's TFN
  • If an employee gives their employer their TFN for super purposes, the employer must pass on their employee's TFN to the super fund within 14 days of receiving it. If employers don't pass on their employee's TFN, they will be liable for a penalty.

    Useful Tip: To see if you’re entitled to receive the Super Guarantee, and what is regarded as ‘salary’, visit the Super Guarantee Explained page

Need to know if you're an employee or contractor?

Try this government decision tool

author pic drew browneDrew Browne is a specialty Financial Risk Advisor working with Small Business Owners & their Families, Dual Income Professional Couples, and diverse families. He's an award-winning writer, speaker, financial adviser and business strategy mentor. His business Sapience Financial Group is committed to using business solutions for good in the community. In 2015 he was certified as a B Corp., and in 2017 was recognised in the inaugural Australian National Businesses of Tomorrow Awards. Today he advises Small Business Owners and their families, on how to protect themselves, from their businesses.  He writes for successful Small Business Owners and Industry publications. You can read his Modern Small Business Leadership Blog here. You can connect with him on LinkedIn Any information provided is general advice only and we have not considered your personal circumstances. Before making any decision on the basis of this advice you should consider if the advice is appropriate for you based on your particular circumstance.

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