Your simple guide to Superannuation Guarantee (SG) contributions

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So just what is the Superannuation Guarantee?
Superannuation Guarantee rate (2002 to 2026 and beyond)
Am I eligible for SG contributions?
How is my SG contribution calculated?
Is there a limit on the SG contribution I can receive?
What happens if I have several jobs?
How are SG contributions taxed?
Watch your annual contributions limit

As employees, most of us see the notes on our payment summary listing our employer’s Superannuation Guarantee (SG) contributions into our super account and rarely give it much thought.

To help you understand these contributions a little better, here’s SuperGuide’s simple explanation of the SG and what it means for your retirement savings.

So just what is the Superannuation Guarantee?

The most common type of contribution regularly going into your super account is likely to be the Superannuation Guarantee – or SG for short – which is the contribution your employer (whether large or small) is required to make into a super fund on your behalf.

The SG is part of the remuneration you receive from your employer. The amount is a percentage of your salary or wages, with the percentage set by the Australian Government and changing over time.

The percentage rate for SG payments by your employer increased from 9.5% in 2020–21 to 10% for 2021–22. This rate is currently set to continue until 1 July 2022, when it is due to increase to 10.5%.

Good to know: The SG rate was originally set to increase to 10% in July 2015, but the government legislated to slow the gradual increases in the rate, delaying the increase to this amount by seven years until 1 July 2021.

Superannuation Guarantee rate (2002 to 2026 and beyond)

Period	Super guarantee rate
1 July 2002 – 30 June 2013	9.00%
1 July 2013 – 30 June 2014	9.25%
1 July 2014 – 30 June 2021	9.50%
1 July 2021 – 30 June 2022	10.00%
1 July 2022 – 30 June 2023	10.50%
1 July 2023 – 30 June 2024	11.00%
1 July 2024 – 30 June 2025	11.50%
1 July 2025 – 30 June 2026 and onwards	12.00%

Source: ATO

If your employer doesn’t pay the required rate of SG into your super account by the quarterly due date, they may have to pay a Superannuation Guarantee Charge (SGC) to the ATO. The SGC includes all the SG amounts owing to an employee, plus interest and an administration fee.

Employers who don’t pay the SG into the correct super fund by the due date must report and rectify the missed payment by lodging an SG Statement and paying the SGC.

Learn more about the Super Guarantee Charge for employers.

Am I eligible for SG contributions?

If your employer is paying you $450 or more (before tax) in a calendar month, you must receive super contributions in addition to your wages. Employees aged under 18 or those classified as a private or domestic worker (like a nanny) must work for more than 30 hours per week to qualify for SG payments.

You are eligible for SG payments whether you are a full time, part time or casual employee.

Need to know: In the May 2021 Federal Budget, the government announced it intended to remove the $450 per month minimum income threshold for employees to receive SG contributions from their employer. This measure is not yet law, but once it passes through Parliament it is expected to apply from 1 July 2022.

Employees who are a company director, a family member working in a business, or someone receiving a super pension or annuity or transition-to-retirement payments are also eligible for SG payments.

Temporary residents are also entitled to receive SG payments into their super account.

Your employer is not required to make SG contributions if you are a non-Australian resident and are paid to do work outside Australia, are an Australian resident but paid by a non-resident employer for work done outside the country, a senior foreign executive on certain visas, or temporarily working in Australia for an overseas employer and are covered by super provisions in a bilateral social security agreement.

If you want to check whether you are entitled to SG contributions from your employer, you can use the ATO’s Am I entitled to super? online tool. It asks questions about your working arrangement to help you determine whether you are entitled to super from your employer.

Contractors and the SG

If you are working as a contractor you may be eligible for SG payments, even if you hold an Australian Business Number (ABN). Contractors who have a contract that is mainly for their personal labour and skill rather than for a result, and who must perform the contracted work personally, should be paid the SG.

In situations where the employer contracts a company, trust or partnership rather than a particular person to provide the labour, the contractor is generally ineligible for SG payments.

You can check the ATO’s Super Guarantee Eligibility Decision Tool to work out if your employer should be paying SG contributions for you. If you are ineligible, you can make your own contributions into your super account.

How is my SG contribution calculated?

In 2021–22, your SG contribution rate is 10% of your ordinary times earnings (OTE) and is paid on top of your wages or salary.

Your OTE is usually the amount you earn for your ordinary hours of work and includes commissions, shift loadings and allowances, bonuses and any over-award payments. It does not include any overtime payments. For more detailed information about what payments are included in OTE, see the ATO’s website.

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

Source: ATO checklist of salary/wages and OTE

To check you are being paid the right amount of SG, the ATO also has an online tool you can use. You simply enter the time period you want to check plus your OTE for each quarter in that period. The tool then calculates how much super your employer should have paid into your super account.

For employees with non-standard employment arrangements, this area can be quite complex, so it can be worth checking with the ATO on 13 10 20 or using the ATO’s information checklist if you think your employer is not paying the right amount of SG based on various wage or salary payments you receive.

Case study

Eric is employed at an IT service desk and his contract requires him to work a minimum number of hours a week. By agreement with his employer, he often works additional shifts if it’s mutually convenient, although there is no consistency or pattern to when this happens.

Eric’s employment is not governed by an award or agreement specifying his ordinary hours of work. Any extra shifts he works are not paid overtime penalties or extra payments.

As Eric’s wage payments are a reward for services provided as an employee, they are classed as salary or wages. Since there are no stipulated ordinary hours of work for Eric’s employment and no obvious pattern of regular or usual hours, all the hours he works are classed as ordinary hours of work and all his wages are OTE.

Source: Adapted from the ATO website

Good to know: SG and JobKeeper

During the COVID-19 crisis, the government paid some employers a $1,500 JobKeeper support payment so they could continue paying their employees, even if the business was closed due to the pandemic.

If you were eligible for a JobKeeper support payment from your employer, the JobKeeper rules required you to receive at least $1,500 per fortnight (before tax), even if you normally earnt less. Your employer was required to continue paying the SG to your super fund on the amount you receive as a JobKeeper payment. If your usual salary per fortnight was less than the $1,500 JobKeeper payment, it was up to your employer to decide whether it paid the SG on the additional money you received as a JobKeeper payment.

Is there a limit on the SG contribution I can receive?

The current SG contribution rate is 10% of your earnings up to a limit called the maximum super contribution base (MSCB). If you earn above that amount in a particular quarter, your employer does not have to make SG contributions for the part of your earnings over the limit.

The MSCB for 2021–22 is $58,920 per quarter, which equals a maximum SG contribution by your employer of $5,892 per quarter.

Learn more about how the maximum super contribution base works.

What happens if I have several jobs?

From 1 January 2020, if you have multiple employers you can apply to opt out of receiving SG contributions from some of your employers so you don’t unintentionally go over your annual concessional (before-tax) contributions cap ($27,500 in 2021–22).

To be eligible to opt out, you must have more than one employer and expect the total of all your employers’ mandated concessional contributions to exceed your concessional cap for the financial year.

Employees in this situation can submit a Super guarantee opt out for high income earners with multiple employers form to the ATO. You then receive an SG employer shortfall exemption certificate to give to one or more of your employers to release them from their SG obligation for up to four quarters within a financial year. This means they will not be liable for the super guarantee charge (SGC) if they do not make SG contributions for you in the quarters covered by the shortfall exemption certificate.

Your employer can’t apply for an exemption on your behalf and you must receive SG contributions from at least one of your employers each quarter. It’s important to note your application must be lodged at least 60 days before the start of the next quarter.

Need to know: Even if you provide some of your employers with an SG employer shortfall exemption certificate that releases them from their SG obligations for up to four quarters within a financial year, they can choose to disregard the exemption certificate and continue making SG contributions on your behalf.

Applying for an exemption may not be beneficial for you as it may affect your pay and other entitlements, so ensure you talk to an accountant or tax agent before lodging the release form.

How are SG contributions taxed?

SG contributions going into your super account receive a concessional tax treatment – which means they are contributions from money that has not been taxed – so they are before tax. That’s why SG contributions are classed as concessional (before-tax) contributions.

Once SG contributions enter your super account, they are taxed at the special low rate of 15% (if your income is up to $250,000) or 30% (on income above $250,000). For many people this tax rate is lower than the marginal tax rate they pay on their normal income.

Watch your annual contributions limit

As there are tax benefits to holding retirement savings in your super account, the government imposes strict annual caps on concessional (before-tax) contributions like SG contributions.

The annual concessional contributions cap is indexed in line with average weekly ordinary time earnings (AWOTE) in increments of $2,500 (rounded down). The annual concessional contributions cap for 2021–22 is $27,500, regardless of your age. (The concessional contribution cap was $25,000 from 1 July 2017 to 30 June 2021.)

If you go over your cap amount, you will have to pay extra tax. The cap applies to the total of all your super accounts across different super funds.

Good to know: If you have a total superannuation balance of less than $500,000 on 30 June of the previous financial year, you can use any unused amount of your annual concessional cap for up to five years to make a carry-forward contribution.

For more information, read SuperGuide article How carry-forward (catch-up) super contributions work.

When monitoring your concessional contributions like the SG for the financial year, remember super contributions are not counted when the payment is sent by your employer, they only count once the payment is received by your super fund.

If you have a salary-sacrifice arrangement with your employer, ensure your super fund receives all the salary-sacrifice contributions from your employer by 30 June, or the contributions will be counted towards your concessional contributions cap for the following financial year.

For more information, see SuperGuide article Salary sacrifice and super: How does it work?

Need to know

From 1 January 2020, your salary-sacrificed super contributions can’t be used by your employers to reduce their SG payment obligations, regardless of the amount you elect to salary sacrifice.

This means your salary-sacrificed amounts don’t count towards your employers’ quarterly SG payment obligations.