• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

SuperGuide

Superannuation and retirement planning information

  • SuperGuide Premium
  • Account
  • Log In
  • SuperGuide Premium
  • Account
  • Log In
  • How super works
    • Super for beginners
    • Super rules
    • Employers guide to super
    • Super contributions
    • Super and tax
    • Accessing super
    • Super news
    • Women and super
    • Super tips and strategies
    • How-to guides
    • Super quizzes
    • Superannuation Q&As
    • Superannuation glossary
  • Super funds
    • Best performing super funds
    • Super fund rankings
    • Best performing pension funds
    • Pension fund rankings
    • Super fund average returns
    • Super investing strategies
    • Comparing super funds
    • Choosing a super fund
    • Choosing an investment option
    • Super fund fees
    • Insurance and super
    • Super fund profiles
  • SMSFs
    • SMSFs for beginners
    • SMSF administration
    • SMSF checklists
    • SMSF compliance
    • SMSF investing
    • SMSF pensions
    • SMSF strategies
    • SMSF Q&As
  • Plan your retirement
    • Retirement planning for beginners
    • When should I retire?
    • How long will I live?
    • How much super do I need?
    • Will I get the Age Pension?
    • How much will I spend in retirement?
    • Financial advice
    • Retiring overseas
    • Preparing for retirement
    • Retirement planning strategies
    • Retirement calculators and reckoners
  • In retirement
    • Income in retirement
    • Super lump sums
    • Super pensions
    • Age Pension
    • Working in retirement
    • Life in retirement
    • Senior concessions and services
    • Aged care
    • Estate planning
    • Super death benefits

Home / How super works / Super contributions

Your simple guide to Superannuation Guarantee (SG) contributions

September 1, 2020 by Janine Mace Leave a Comment

Reading time: 5 minutes

On this page

  • So just what is the Superannuation Guarantee?
  • Superannuation Guarantee rate (2002 to 2026)
  • 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 regular note on our payment summary listing the amount for our employer’s Superannuation Guarantee (SG) contribution into our super account and rarely give it much thought.

To help you understand it 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 current rate for SG payments by your employer is 9.5%, with this rate currently set to continue until 1 July 2021, when it will increase to 10%.

Note: 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 7 years until July 2021.


Advertisement
SuperGuide Premium is ad-free

Good to know: Although the SG rate is legislated to increase to 10% from 1 July 2021, in the wake of the COVID-19 crisis, there is considerable lobbying going on within the Morrison Government to delay this increase yet again.


Superannuation Guarantee rate (2002 to 2026)

PeriodSuper guarantee rate
1 July 2002 – 30 June 20139.00%
1 July 2013 – 30 June 20149.25%
1 July 2014 – 30 June 20219.50%
1 July 2021 – 30 June 202210.00%
1 July 2022 – 30 June 202310.50%
1 July 2023 – 30 June 202411.00%
1 July 2024 – 30 June 202511.50%
1 July 2025 – 30 June 2026 and onwards12.00%

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.

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.


Need to know: You are eligible for SG payments whether you are a full-time, part-time or casual employee.


Employees who are a company director, a family member working in a business, or someone receiving 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.

Compare super funds

Read more...

Advertisement

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 or not 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 not eligible 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?

Your SG contribution is currently 9.5% 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 typeSalary or wagesOrdinary time earnings (OTE)
Overtime hours: Award stipulates ordinary hours to be worked and employee works additional hours for which they are paid overtime ratesYesNo
Overtime hours: Agreement prevails over awardYesNo
Agreement supplanting award removes distinction between ordinary hours and other hoursYes: All hours workedYes: All hours worked
No ordinary hours of work stipulatedYes: All hours workedYes: All hours worked
Casual employee: Shift loadingsYesYes
Casual employee: Overtime paymentsYesNo
Casual employee whose hours are paid at overtime rates due to a ‘bandwidth’ clauseYesNo
Piece-rates: No ordinary hours of work stipulatedYesYes
Overtime component of earnings based on hourly-driving-rate method stipulated in awardYesNo

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.

Advertisement

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 has been paying some employers a $1,500 JobKeeper support payment so they can continue paying their employees, even if the business is closed due to the pandemic.

If you are eligible for a JobKeeper support payment from your employer, you must receive at least $1,500 per fortnight (before tax), even if you normally earn less. Your employer must continue paying the SG to your super fund on the amount you receive as a JobKeeper payment.

When an employee’s usual salary per fortnight is less than the $1,500 JobKeeper payment, it is up to your employer to decide whether it will pay the SG on the additional money you receive as a JobKeeper payment.

For example, if you normally earn $1,000 per fortnight (before tax), but the JobKeeper payment provides you with an additional $500 per fortnight (before tax), your employer must continue paying SG on your $1,000 per fortnight. Paying SG on the additional $500 (before tax) you are receiving is optional and is up to your employer.


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

The current SG contribution rate is 9.5% 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 2020/21 is $57,090 per quarter, which equals a maximum SG contribution of $5,423.55 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 concessional (before-tax) contributions cap.

To be eligible to opt out, you must have more than one employer and expect the total of all your employers’ 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.

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.


Advertisement

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 in one 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% (if your income is over $250,000). For many people this tax rate is lower than the marginal tax rate they pay on their 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.

From 1 July 2017, the 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 2020/21 is $25,000, regardless of your age.

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 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’ SG payment obligations.


Want to learn how you can boost your super?

Become a SuperGuide Premium member and access independent expert guides on how much you can contribute, salary sacrificing, tax-deductible super contributions, contributions caps and contributions strategies, best-performing super funds, the latest super rates and thresholds, and other super strategies.

Includes performance rankings for 235 super funds and 166 pension funds, more than 500 articles, how-to guides, checklists, tips, calculators, case studies, quizzes and a monthly newsletter.

Find out more


Learn more about making super contributions in the following SuperGuide articles:

How to make super contributions after you’ve retired

July 8, 2020

Contributing to your super in your late 60s: What are the rules?

July 3, 2020

Work test: Making super contributions over 67

July 1, 2020

Non-concessional super contributions guide (2020/21)

June 26, 2020

Concessional super contributions guide (2020/21)

June 22, 2020

How do tax-deductible superannuation contributions work?

February 1, 2020

Beginner’s guide to making super contributions

January 1, 2020

Learn more about the superannuation guarantee (SG) in the following SuperGuide articles:

Retirement Income Review finds 9.5% super is enough

November 23, 2020

Employer’s guide to Superannuation Guarantee (SG) contributions: Which employees are eligible?

November 13, 2020

Calculating your employees’ SG contributions? The rules to help get it right

November 13, 2020

What to do if your employer doesn’t pay your super

September 18, 2020

What is the maximum super contribution base for 2020/21?

September 1, 2020

Does the ATO do enough on unpaid super?

June 12, 2019

Related topics

How super works Super contributions

IMPORTANT: All information on SuperGuide is general in nature only and does not take into account your personal objectives, financial situation or needs. You should consider whether any information on SuperGuide is appropriate to you before acting on it. If SuperGuide refers to a financial product you should obtain the relevant product disclosure statement (PDS) or seek personal financial advice before making any investment decisions. Comments provided by readers that may include information relating to tax, superannuation or other rules cannot be relied upon as advice. SuperGuide does not verify the information provided within comments from readers. Learn more

© Copyright SuperGuide 2009-21. Copyright for this article belongs to SuperGuide Pty Ltd, and cannot be reproduced without express and specific consent. Learn more

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

How super works
Super for beginners
Super rules
Employers guide to super
Super contributions
Super and tax
Accessing super
Super news
Women and super
Super tips and strategies
How-to guides
Super quizzes
Superannuation Q&As
Superannuation glossary
Super funds
Best performing super funds
Super fund rankings
Best performing pension funds
Pension fund rankings
Super fund average returns
Super investing strategies
Comparing super funds
Choosing a super fund
Choosing an investment option
Super fund fees
Insurance and super
Super fund profiles
SMSFs
SMSFs for beginners
SMSF administration
SMSF checklists
SMSF compliance
SMSF investing
SMSF pensions
SMSF strategies
SMSF Q&As
Plan your retirement
Retirement planning for beginners
When should I retire?
How long will I live?
How much super do I need?
Will I get the Age Pension?
How much will I spend in retirement?
Financial advice
Retiring overseas
Preparing for retirement
Retirement planning strategies
Retirement calculators and reckoners
In retirement
Income in retirement
Super lump sums
Super pensions
Age Pension
Working in retirement
Life in retirement
Senior concessions and services
Aged care
Estate planning
Super death benefits
Advertisement
Compare super funds

Kickstart your retirement planning

Try our free 7-day email series on planning your retirement, including how much super you’ll need, when you can retire and a quiz to test what you’ve learned.

Learn more

Footer

Important: Disclaimer

All information on SuperGuide is general in nature only and does not take into account your personal objectives, financial situation or needs.

You should consider whether any information on SuperGuide is appropriate to you before acting on it.

If SuperGuide refers to a financial product you should obtain the relevant product disclosure statement (PDS) or seek personal financial advice before making any investment decisions.

Learn more

About SuperGuide

SuperGuide is Australia’s leading superannuation and retirement planning website. Learn more

Superguide Pty Ltd ATF Superguide Unit Trust as a Corporate Authorised Representative (CAR) is a Corporate Authorised Representative of Independent Financial Advisers Australia, AFSL 464629

  • Contact us
  • Advertise on SuperGuide
  • Careers

Before using this website

  • New to SuperGuide?
  • Terms and Conditions of Use
  • Financial Services Guide
  • Privacy Policy and Privacy Collection
  • Copyright Policy
  • Editorial Policy and Complaints
  • Disclaimer

  • SuperGuide Premium
  • Subscriber feedback
  • Sitemap