Superannuation Guarantee (SG)

The Superannuation Guarantee (SG) scheme came into effect on 1 July 1992 and requires employers to provide a set, minimum level of superannuation each quarter for each employee. SG was brought in to ensure that all workers have access to employer-sponsored superannuation.

Under SG legislation, employers are required to contribute 9% of their employees' ordinary time earnings to a complying superannuation fund or retirement savings account. The main exceptions are:

• Employees whose salary or wages are less than $450 in a month - SG is not payable for that month.
• Employees aged 70 or more or less than 18 years and working not more than 30 hours each week.

However, the Federal Government has announced in its 2010 Budget that it will gradually increase the SG rate between 1 July 2013 and 1 July 2019 to 12%. Furthermore that it will raise the age an employee can be eligible for SG contributions from 70 to 75, provided he/she continues to meet the work test.

Ordinary time earnings (OTE) generally means earnings for ordinary hours of work (other than certain lump sum payments made on termination of employment) including over-award payments, shift loading, commissions, allowances (other than reimbursement of expenses) and paid leave. The Australian Taxation Office (ATO) administers compliance with the SG legislation and has released the following ruling on OTE (ATO Superannuation Guarantee Ruling SGR 2009/2):

An employer's superannuation contributions for their employees which are made in accordance with a Commonwealth, State or Territory law, an industrial award or occupational arrangement can count towards an employer's SG obligations

The SG legislation also gives many employees the right to select a super fund of their choice for their employer to pay their super contributions made on their behalf. If you are eligible for choice, your employer must start contributing to the fund of your choice within two months of you making that choice to avoid paying the choice shortfall. The choice shortfall is part of the Superannuation Guarantee Charge. If choice is available to you and you would like to nominate Maritime Super for your employer contributions, call Member Services to find out how.

When are SG contributions payable?

Employers must pay SG at least quarterly, within 28 days after the SG quarter. These dates are:

Superannuation Guarantee (SG) quarter	Due date for SG payment
1 July - 30 September	28 October
1 October - 31 December	28 January
1 January - 31 March	28 April
1 April - 30 June	28 July

Employers are now generally able to pay any late SG contributions to a super fund but only until the SG Charge assessment is raised, to offset the contribution part of the Charge (although interest and administration fees will still be payable to the ATO). Late SG contributions will also not be tax deductible to the employer.

The scheme is administered on a self assessment basis (and the employer generally determines if the tax is payable). The SGC is not tax deductible, whereas contributions to a super fund for the benefit of employees in compliance with SG obligations are generally tax deductible.

The SG Charge must be paid to the ATO (and an SG Charge Statement lodged) by the relevant due date:

SG quarter	Due date for lodgment of SG Charge Statement and payment of SG Charge
1 July - 30 September	28 November
1 October – 31 December	28 February
1 January – 31 March	28 May
1 April – 30 June	28 August

The SG Charge also applies if the employer does not meet their choice of fund obligations for eligible employees. The choice liability is 25% of the notional quarterly shortfall less any individual SG shortfall for that employee for the quarter (limited to $500 per notice period per employee).