Understanding the Rate Progression Timeline

The superannuation guarantee has been steadily increasing over recent years as part of the Australian Government’s plan to boost retirement savings for all workers. The progression shows how we’ve reached this point: 10% in the 2021-22 financial year, 10.5% in 2022-23, 11% in 2023-24, and 11.5% in the current 2024-25 financial year. The final jump to 12% in July 2025 marks the end of this planned increase schedule.

This isn’t just a small adjustment – for a full-time employee earning $70,000 annually in ordinary time earnings, you’ll be contributing an additional $350 per year compared to the current rate. While this might seem modest per individual employee, it adds up quickly across your entire workforce and requires careful budgeting and payroll system updates.

What This Means for Your Payroll Systems

You’ll need to update your payroll software and processes before 1 July 2025 to reflect the new 12% superannuation guarantee rate. This timing is crucial because super guarantee calculations are based on when you pay your employees, not when they earn the income. If your pay period crosses the July 1 deadline, any payments made on or after July 1 must use the 12% rate, even if some of the work was performed in June.

Remember that these employer contributions are separate from any voluntary contributions your employees might make to their super account. The superannuation guarantee represents the minimum amount you must pay, calculated on each eligible employee’s earnings base up to the maximum contribution base, which is currently $64,050 per quarter.

How to Calculate and Pay the Right Super Guarantee Contributions

Getting your super contributions right protects both your employees’ future and your business from penalties. The process involves understanding what earnings count, applying the correct superannuation guarantee rate, and ensuring payments reach the right super funds on time.

SG contributions are calculated on your employees’ ordinary time earnings, which includes their regular salary or wages before tax. This covers base salary, overtime payments, allowances, and commissions, but excludes certain payments like expense reimbursements or genuine redundancy payments. Understanding what counts as ordinary time earnings helps ensure you’re meeting your obligations while not overpaying on items that aren’t subject to the superannuation guarantee.

Working Out Your Contribution Amounts

To calculate how much super to pay each quarter, multiply each employee’s ordinary time earnings by the applicable superannuation guarantee rate. For the 2024-25 financial year, that’s 11.5%, and from July 2025, it becomes 12%. For example, if an employee earns $15,000 in ordinary time earnings during a quarter, your super guarantee contribution would be $1,725 at the current 11.5% rate, or $1,800 once the 12% rate takes effect.

The maximum contribution base applies to high earners, currently set at $64,050 per quarter. This means even if an employee earns more than this amount, you only need to pay super guarantee contributions on earnings up to this limit. However, this doesn’t prevent you from making additional employer contributions above this threshold if you choose to do so.

Ensuring Payments Reach the Right Super Funds

Your super guarantee obligations aren’t complete until the money actually reaches your employees’ superannuation funds. If you use a clearing house to distribute super contributions, factor in their processing times to ensure payments arrive before quarterly deadlines. The Australian Taxation Office’s Small Business Superannuation Clearing House considers payments made when they receive them, but commercial clearing houses may take additional time to transfer funds to individual super accounts.

You can pay super contributions more frequently than quarterly if it suits your cash flow, but you must still meet the minimum quarterly requirements by the due dates. Many businesses find monthly or fortnightly super payments easier to manage and appreciated by employees who see their retirement savings growing regularly throughout the year.

To avoid compliance issues with your super guarantee obligations, read our article on Super Guarantee Compliance.

Meeting Payment Deadlines and Avoiding the Superannuation Guarantee Charge

Understanding super payment deadlines and the consequences of missing them helps you avoid costly penalties while ensuring your employees receive their entitlements on time. The superannuation guarantee charge system is designed to encourage timely payments and compensate employees for delays in receiving their retirement savings.

Super guarantee contributions must be paid quarterly, with specific due dates that don’t change year to year. The quarterly periods run from July to September (due 28 October), October to December (due 28 January), January to March (due 28 April), and April to June (due 28 July). When these dates fall on weekends or public holidays, you have until the next business day to pay super contributions.

Understanding the Superannuation Guarantee Charge

If you miss a payment deadline or pay less than the minimum amount required, you’ll face the superannuation guarantee charge – a penalty that’s more expensive than simply making the correct payment on time. The superannuation guarantee charge isn’t tax deductible, meaning it comes directly from your business profits without providing any benefit to your after tax income.

The superannuation guarantee charge calculation includes several components that make it significantly more costly than the original super guarantee obligation. You’ll pay the shortfall amount (the difference between what you should have paid and what you actually paid), plus 10% annual interest calculated from the start of the quarter until you lodge your superannuation guarantee charge statement. There’s also a $20 administration fee per employee per quarter.

Real-World Superannuation Guarantee Charge Example

Consider a scenario where you employ 10 staff members who each earn $10,000 in ordinary time earnings during a quarter, and you mistakenly use the old 11% rate instead of the current 11.5% rate. Your shortfall would be $500 across all employees ($50 per employee). With 10% annual interest and $20 administration fees per employee, your total Superannuation Guarantee Charge could easily exceed $700 – plus you still need to make the original Super Guarantee contributions.

Strategies to Avoid Payment Issues

Set up calendar reminders well before each quarterly deadline to allow time for processing. If you’re using salary sacrifice arrangements, remember these are additional to your superannuation guarantee obligations – you still need to pay the full super guarantee amount on top of any concessional contributions your employees make through salary sacrifice. Consider automating your super contributions through your payroll system to reduce the risk of human error or missed deadlines.

Understanding Contribution Types and Limits

Managing different types of super contributions helps you support your employees’ retirement savings while staying within Australian Taxation Office guidelines. Understanding these contribution types and their limits ensures you can offer competitive benefits without creating tax complications for your team.

Employer contributions you make as part of the superannuation guarantee are classified as concessional contributions, which are taxed at 15% within the super fund rather than at the employee’s marginal tax rate. This makes them an effective way to boost retirement savings, as most employees will save tax compared to receiving the same amount as additional salary.

Concessional Contributions Cap

The concessional contributions cap for the 2024-25 financial year is $30,000, rising to $32,500 from 1 July 2025. This cap includes your mandatory super guarantee contributions plus any additional employer contributions and salary sacrifice amounts. For employees over 50, there may be opportunities to use unused amounts from previous years through the carry-forward provisions, provided their total superannuation balance is below $500,000.

Supporting Low Income Earners

Low income earners receive extra help from the Australian Government to grow their retirement savings. One way is through the low income superannuation contribution, also known as the Low Income Superannuation Tax Offset. If your staff earn $37,000 or less a year, the government may refund up to $500 of the tax paid on their concessional contributions, which includes your super guarantee payments. This means your contributions go further in helping your team build their superannuation account.

On top of this, there’s also the government co-contribution scheme. If your employees make personal after-tax contributions to their super fund, the government may add up to 50 cents for every dollar they put in, up to $500 each year. These programs work together to make sure your super guarantee contributions and any voluntary contributions your employees make have the biggest impact, especially for those on lower wages. As an employer, making timely super payments and helping your team understand these benefits can make a real difference to their future retirement savings.

Non-Concessional Contributions

While your focus as an employer is primarily on concessional contributions through the superannuation guarantee, understanding non-concessional contributions helps you advise employees about their options. These after tax contributions have a separate cap of $120,000 per year and can be an effective way for employees to boost their retirement savings beyond what you provide through super guarantee contributions.