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Paying superannuation for your employees is compulsory. Here’s how to make it easier and more efficient – and stay on the right side of the ATO and Fair Work.
While there is plenty of information online about Fair Work rules, seek professional advice to save time, especially when hiring your first employees. A nifty package of Essential Workplace Policies is a good place to start (the 12-month subscription delivers the latest information about complying with the Fair Work Act, and includes a starter pack of workplace policies).
You can also get personalised HR advice over the phone, like this HR Help Premium Service, which offers professional consultation on Fair Work compliance and HR best practices.
Superannuation is a savings plan for retirement. Employers must pay at least the super guarantee on top of regular wages and, in most cases, you'll be paying superannuation for employees if a staff member is:
If you're self-employed, the government expects you to set up your own retirement savings. Consider making super contributions to a superannuation fund anyway, even if you have other savings, as people who are self-employed (such as sole traders and partners in a partnership) may be eligible for benefits including:
The latest minimum rate for the super guarantee is 9.5% of an employee's ordinary time earnings, but not overtime. Check out the ATO's fact sheets on how much super to pay and how to work out whether payments are considered 'ordinary time earnings'.
The super guarantee must be paid:
Every employee eligible for super will need a fund, which they might be able to choose – but note, you can’t give employees advice about choosing a fund. Instead, refer them to ASIC's MoneySmart fact sheets.
The ATO's guidelines for super include 7 key steps:
Super payments are calculated from the day someone works for you and must be paid at least every quarter. The ATO's quarterly due dates for super payments are generally 28 days after the end of a quarter:
Poor cashflow can sometimes cause businesses to miss important payments such as super and tax. Sort superannuation for your employees by getting a Credit Management subscription for 12 months, which includes CreditorWatch monitoring and debt-collection tools that integrate with Xero software.
Accounting software automates a lot of the day-to-day processes for super contribution amounts, wages and tax, so it's worth learning the key functions. You can get up to speed with Bookkeeping Setup and Training, an online training course which includes 15 hours of personal one-on-one training using Xero (note: you'll need to buy Xero separately) and access to how-to guides. Xero is SuperStream compliant.
The ATO's SuperStream system is now compulsory for employers. It streamlines the transmission of employee information and super payments in a standard electronic format among employers, super funds, service providers and the ATO.
The big benefit for employers is you can track all super for each period in a single transaction with a unique payment reference – even if those payments go to multiple funds.
Businesses with fewer than 20 employees or an aggregated turnover of less than $10 million a year can use the free Small Business Superannuation Clearing House service. You make a single electronic payment into the clearing house, which will then distribute payments to each employee's superannuation fund.
Want more general information to sort superannuation for your employees? Take a look at these helpful resources on the superannuation system in Australia.