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Working out the right amount for the quarterly Superannuation Guarantee (SG) contributions you need to make on behalf of your employees can be tricky.
Not every payment you make to an employee needs to be included when you calculate your 9.5% SG contribution, so you need to ensure you get it right.
Check out SuperGuide’s tips on the rules to help make your task a whole lot easier.
How to calculate the Super Guarantee
The general rule when it comes to calculating the SG for your employees is each quarter you must pay 9.5% of an eligible employee’s ordinary time earnings (OTE) to their super account.
The 9.5% rate is the minimum amount you must pay, although some industrial awards require a higher contribution amount. When making super contributions for employees covered by an industrial award, it’s important to ensure your contributions are sufficient to cover both the amounts required by the award and also the SG rules.
An employee’s OTE is usually calculated as the amount they earn for their ordinary hours of work and includes things like commissions, shift loadings and allowances, but not overtime payments.
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When calculating SG contributions for your employees, simply multiply an employee’s OTE for the quarter by the current SG rate (9.5% in 2020/21).
What’s included in the SG calculation
There are a range of employee payments considered as OTE and these must be included when you calculate an employee’s SG contribution.
In working out OTE, you need to understand the definition of ordinary hours. These are the normal hours your employees work, unless specified in an award or agreement. In situations where there are no normal hours (such as for casuals), these are the actual hours worked.
Under the Fair Work Act 2009, ordinary hours for employees not working under an industrial award or enterprise agreement are capped at 38 hours.
Checklist of OTE payments included for SG purposes
Awards and agreements
| Payment type | Salary or wages | Ordinary time earnings (OTE) |
|---|---|---|
| Overtime hours – award stipulates ordinary hours to be worked and employee works additional hours for which they are paid overtime rates | Yes | No |
| Overtime hours – agreement prevails over award | Yes | No |
| Agreement supplanting award removes distinction between ordinary hours and other hours | Yes – all hours worked | Yes – all hours worked |
| No ordinary hours of work stipulated | Yes – all hours worked | Yes – all hours worked |
| Casual employee: shift loadings | Yes | Yes |
| Casual employee: overtime payments | Yes | No |
| Casual employee whose hours are paid at overtime rates due to a ‘bandwidth’ clause | Yes | No |
| Piece-rates – no ordinary hours of work stipulated | Yes | Yes |
| Overtime component of earnings based on hourly-driving-rate method stipulated in award | Yes | No |
Allowances
| Payment type | Salary or wages | Ordinary time earnings (OTE) |
|---|---|---|
| Allowance by way of unconditional extra payment | Yes | Yes |
| Expense allowance expected to be fully expended | No | No |
| Danger allowance | Yes | Yes |
| Retention allowance | Yes | Yes |
| Hourly on-call allowance in relation to ordinary hours of work for doctors | Yes | Yes |
Expenses
| Payment type | Salary or wages | Ordinary time earnings (OTE) |
|---|---|---|
| Reimbursement | No | No |
| Petty cash | No | No |
| Reimbursement of travel costs | No | No |
| Payments for unfair dismissal | No | No |
| Workers’ compensation: returned to work | Yes | Yes |
| Workers’ compensation: not working | No | No |
Leave
| Payment type | Salary or wages | Ordinary time earnings (OTE) |
|---|---|---|
| Annual leave | Yes | Yes |
| Annual leave loading – demonstrably referable to a loss of opportunity to work overtime | Yes | No |
| Annual leave loading – all other | Yes | Yes |
| Sick leave | Yes | Yes |
| Parental leave – e.g. maternity leave, paternity leave, adoption leave | No | No |
| Ancillary leave – egg jury duty, defence reserve service | No | No |
Termination payments
| Payment type | Salary or wages | Ordinary time earnings (OTE) |
|---|---|---|
| Termination payments: in lieu of notice | Yes | Yes |
| Termination payments: unused annual leave, long service leave or sick leave | Yes | No |
Bonuses
| Payment type | Salary or wages | Ordinary time earnings (OTE) |
|---|---|---|
| Performance bonus | Yes | Yes |
| Bonus labelled as ex-gratia but in respect of ordinary hours of work | Yes | Yes |
| Christmas bonus | Yes | Yes |
| Bonus in respect of overtime only | Yes | No |
Source: ATO checklist of salary/wages and OTE
What’s not included in the SG calculation
A range of employee payments are not considered as OTE and are not included in SG calculations, including:
- Overtime
- Fully expended expense allowances (including car allowances)
- Reimbursed expenses
- Jury or defence reserve top-up payments
- Parental leave payments
- Termination payments for annual leave loading, sick leave or long service leave
- Redundancy payments
- Dividends, partnership and trust distributions
- Restraint of trade agreement payments
Tips for high income employees: Watch the SG contribution cap
When it comes to your employees on higher salaries, you are only required to make SG contributions on their earnings up to an annual cap, which is called the Maximum Super Contributions Base (MSCB).
The MSCB is indexed to Average Weekly Ordinary Time Earnings (AWOTE), so it changes every financial year. It does not apply to other mandated contributions such as those paid under an award.
The MSCB for 2020/21 is $57,090 per quarter, which equals a maximum SG contribution of $5,423.55 per quarter ($57,090 x 9.5%). Amounts for previous years are listed below:
Maximum super contributions base (MSCB) for 2020/21 and previous years
| Income year | Income per quarter | Maximum SG contribution per quarter (SG contribution rate x quarterly income) |
|---|---|---|
| 2020/21 | $57,090 | $5,423.55 |
| 2019/20 | $55,270 | $5,250.65 |
| 2018/19 | $54,030 | $5,132.85 |
| 2017/18 | $52,760 | $5,012.20 |
| 2016/17 | $51,620 | $4,903.90 |
| 2015/16 | $50,810 | $4,826.95 |
| 2014/15 | $49,430 | $4,695.85 |
| 2013/14 | $48,040 | $4,443.70 |
| 2012/13 | $45,750 | $4,117.50 |
| 2011/12 | $43,820 | $3,943.80 |
| 2010/11 | $42,220 | $3,799.80 |
| 2009/10 | $40,170 | $3,615.30 |
| 2008/09 | $38,180 | $3,436.20 |
Source: ATO
The MSCB is a quarterly income figure, so it aligns with your obligation to make SG contributions into your employees’ super accounts on a quarterly basis.
Employees with several jobs – SG employer shortfall exemption
From 1 January 2020, employees with multiple employers are able to opt out of receiving SG contributions from some of their employers so they do not unintentionally go over their concessional (before-tax) contributions cap.
Employees in this situation can submit a Super guarantee opt out for high income earners with multiple employers form to the ATO.
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They then receive an Employer SG Shortfall Exemption Certificate to give to one or more of their employers to release them from their SG obligation for that employee. The employee must still be receiving SG contributions from at least one of their employers each quarter.
As an employer, you cannot apply for an exemption on behalf of your employee.
Checking your calculations: Super Guarantee Contributions Calculator
If you’re still confused – or want to double check your SG contribution calculations – the ATO has a useful tool on its website to help you work out the SG amounts you need to pay for your eligible workers.
The ATO’s Super Guarantee Contributions Calculator tool works out how much super you need to contribute for your eligible employees. It allows you to calculate your contributions weekly, fortnightly, monthly or quarterly.
The calculator tool also works out SG sub-totals for each individual super fund and the total of all your payable SG contributions.
If you’re unsure if one of your employees is eligible to receive an SG contribution from you, use the ATO’s SG Eligibility Decision Tool before starting.
