Superannuation is a vital part of running a business in Australia. If you have employees, you must make regular super contributions on their behalf. However, understanding how to pay superannuation can feel overwhelming if you’re a small business owner.
This blog article is here to help you navigate the superannuation process and introduce you to a tool that can make managing super easy—Payroller. The information in this article will help you better understand your obligations and how to simplify your super payments.
What are your super obligations as an employer in Australia?
As a small business owner, it’s crucial to understand your obligations to stay on top of super payments. Here’s a breakdown of the key requirements:
- Pay the correct amount: You must contribute 11.5% of your employee’s ordinary time earnings (OTE) to their super fund.
- Meet the deadlines: Super payments are due on the 28th day of the month following the end of each quarter (e.g., 28th October for the July-September quarter).
- Provide employees with a choice of fund: Employees can nominate their preferred super fund. If they don’t, you must select a default fund for them.
- Use SuperStream: All businesses must pay super electronically through a system called SuperStream. This means both the payment and the data about the payment are sent electronically.
- Submit payment via a super clearing house simplifies paying into multiple super funds. Many small businesses use the ATO’s free clearing house or Payroller’s built-in option with Beam.
You must meet these obligations to avoid penalties, interest, and additional payments. Make sure you’re keeping track of your super contributions to avoid any issues with the ATO.
Super payment obligations to part-time and casual employees
Superannuation isn’t just for full-time employees. You must also pay super for part-time and casual employees above 18 years old, regardless of what they earn. This means if you have part-time staff, you must still contribute 11.5% of their earnings to their nominated super fund.
For example, if a part-time employee works 20 hours a week and earns $600 a fortnight, you’ll need to calculate 11.5% of their earnings and ensure those contributions are paid into their super fund.
Super payment obligations to under 18 employees
Employees under 18 years old follow the same rule if they work for more than 30 hours per week, regardless of how much you pay them. This requirement ensures that younger workers are not excluded from building their retirement savings and receiving the benefits of superannuation.
The number of hours worked is the actual number of hours the employee works in that week. This should not be averaged across non-weekly pay periods or employment with other businesses.
How to pay superannuation for employees
Paying superannuation for your employees involves making contributions to their super fund based on their earnings. As an employer, you must pay super for any employee above 18 years old, regardless of their employment type and earnings. You must contribute at least 11.5% of their ordinary time earnings (OTE) into their nominated super fund.
Here’s a step-by-step process to help you understand how to pay super for your employees:
1. Calculate super contributions
You must calculate 11.5% of your employee’s ordinary time earnings (OTE). OTE includes regular wages, bonuses, and allowances but excludes overtime pay.
It’s important to ensure that you accurately calculate this percentage based on the most updated superannuation laws. Errors can lead to underpayment or overpayment, both of which can have financial consequences for your business. Regularly reviewing your calculation methods can help maintain accuracy.
2. Choose a super fund
Your employee may already have a super fund, or you can choose a default super fund. Make sure the fund complies with superannuation laws.
If your employee has a preferred super fund, they should provide you with the necessary details. If not, selecting a default fund that meets the government’s MySuper requirements ensures that your employees are receiving appropriate benefits. Check for eligible industrial awards that mandate a designated super fund.
It’s advisable to communicate with employees about their options and any changes in superannuation laws that may affect their choices.
3. Register with a super clearing house
This service helps you pay super to multiple funds in one transaction. You can use the Australian Tax Office’s (ATO) free super clearing house or a private clearing house.
Using a clearing house simplifies the payment process, saving you time and reducing the risk of errors when managing multiple super funds. Make sure to register well in advance of payment deadlines to avoid any delays in processing.
4. Submit payments
Use your payroll software or clearing house to submit timely super payments. Payments must be made quarterly—by the 28th of the following month after each quarter. Set reminders for these deadlines to ensure compliance and avoid late penalties from the ATO. Additionally, consider automating the superannuation process to streamline payments.
5. Keep records
Always keep a record of your payments and correspondence with super funds to ensure you’re staying compliant. Maintaining accurate records is crucial for future audits and for resolving any disputes that may arise regarding contributions.
Keep copies of payment confirmations, correspondence with super funds, and any relevant documentation related to employee entitlements. Regularly reviewing these records can help you stay organised and prepared for any inquiries from the ATO or other regulatory bodies.
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Learn how to set up and submit super payments through BEAM with our easy-to-follow user guide oand video tutorial.
Superannuation payment deadlines: When to pay for super
To avoid penalties, you must make superannuation payments on time. The deadlines for 2023/2024 quarterly payments are:
| Period | Payment Deadline |
|---|---|
| 1 July – 30 September | Due by 28 October |
| 1 October – 31 December | Due by 28 January |
| 1 January – 31 March | Due by 28 April |
| 1 April – 30 June | Due by 28 July |
It’s important to keep track of these dates. Missing a deadline can result in additional charges, interest, or penalties from the ATO. Payroller can help you stay on top of deadlines by automating reminders and ensuring your super payments are submitted on time.
How often does an employer have to pay super?
Employers are required to pay superannuation contributions for eligible employees at least four times a year, specifically on a quarterly basis. This means that super contributions must be made for each quarter, with payment deadlines set for the 28th of the month following the end of each quarter.
While quarterly payments are the minimum requirement, employers have the option to make contributions more frequently, such as monthly or fortnightly, if it better suits their business. It’s important for employers to stay compliant with these regulations to avoid penalties and ensure their employees’ superannuation is properly funded.
Low-cost superannuation payment options for small businesses
For small business owners, every dollar counts. Managing super payments shouldn’t be an expensive task. Here are some low-cost options to help you meet your super obligations without breaking the bank:
- ATO’s Small Business Super Clearing House (SBSCH): This free service is available to small businesses with 19 or fewer employees or an annual turnover of less than $10 million. It allows you to make super payments to multiple funds with one transaction. (Not sure what a SBSCH is? We cover that below; keep reading!)
- Payroll software with Beam: If you’re looking for a simple and low-cost solution, Payroller integrates with Beam to help you manage super payments directly from your payroll system. It automates the process, saving you time and reducing the risk of errors.
- Industry super funds: Some super funds offer lower fees and simplified processes for small businesses. It’s worth researching which fund offers the best deal for your business.
Payroller’s partnership with BEAM: Superannuation made simple
At Payroller, we’re committed to making payroll as smooth and easy as possible for Australian small businesses. That’s why we’ve partnered with BEAM, a superannuation clearing house that streamlines how you process your employees’ super contributions. Now, you can manage all your employee payroll, superannuation, and STP reporting in one place—right from the Payroller app.
So, what is BEAM? BEAM is a super clearing house designed to save you time by eliminating the need for third-party portals or manual file uploads. Everything from calculating super to processing and submitting contributions is handled in one simple, easy-to-use platform.
Here’s how Payroller and BEAM work together:
- Super and payroll are in one place: There will be no more jumping between portals. Payroller calculates and tracks super contributions as part of the payroll process. When it’s time to pay super, you can batch all contributions in one go.
- Fast, flexible payments: Super payments are loaded in one batch and sent directly to your employees’ super funds. With payment options like BPay and direct deposit, you can choose the method that works best for your business.
- Real-time notifications: Receive alerts and notifications to track the progress of your super payments. You’ll know immediately if there’s an error or if a payment needs attention.
- Secure payments: We know security is important, and BEAM uses multiple layers of protection to ensure your data and your employees’ information remain safe.
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Superannuation payments made super simple
Superannuation might seem like a complex process, but it can be simple and stress-free with the right tools. Here are the critical takeaways for small business owners:
- Always pay super on time to avoid penalties. The deadlines are the 28th of October, January, April, and July.
- Calculate the correct amount of superannuation based on your employee’s ordinary time earnings.
- Use a super clearing house like Payroller with Beam to make payments easily and comply with SuperStream regulations.
- Keep records of your payments and communications to avoid issues with the ATO.
Payroller is here to help Australian small businesses manage payroll and superannuation easily. Payroller takes the hassle out of payroll by automating super calculations, offering built-in clearing house options, and sending deadline reminders.
Ready to streamline your payroll process? Try Payroller today and see how it can make managing superannuation easier for your business.
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