Understanding Your Superannuation Obligations for Employees

Why Superannuation Matters for Your Trade Business

As a tradie running a business, you've got a lot on your plate. But one thing you can't afford to overlook is superannuation for your employees. Getting it wrong can lead to hefty fines and stress you don't need. This guide breaks down what you need to know in plain English.

Who Gets Superannuation?

• Most employees aged 18 and over who earn $450 or more in a calendar month, before tax, must get super.
• Employees under 18 who earn $450 or more in a calendar month, before tax, must also get super, but only for work done in that month.
• Contractors paid mainly for their labour also usually need to be paid super. Check if they're an 'employee' for super purposes.
• Specific rules apply to temporary residents who are paid to work in Australia. Generally, they can claim their super when they leave Australia permanently.

How Much Super Do You Need to Pay?

The Superannuation Guarantee (SG) rate is set by the government and changes from time to time. You must pay at least the current SG rate on top of your employee's ordinary time earnings (OTE). OTE generally includes your employee's base pay, allowances, and any shift loadings, but not overtime payments. Always check the ATO website for the current SG rate.

When Do You Need to Pay Super?

Choosing a Super Fund and Making Payments

1. Your employee can usually choose their own super fund. If they don't have a chosen fund, you might need to set one up for them (a 'stapled' super fund).
2. You'll need to provide your employee with a 'Superannuation standard choice' form within 28 days of them starting work. This form tells them they can choose their own fund and what happens if they don't.
3. Once you know their fund details, you can make payments. Many payroll software and super funds offer easy ways to make these payments electronically.

What If You Miss a Payment or Get It Wrong?

The ATO takes superannuation seriously. If you're late with payments or don't pay the full amount, you'll have to pay the Superannuation Shortfall Charge. This charge covers the shortfall, includes interest, and doesn't count as a tax deduction for your business. On top of that, you could face penalties. It's much cheaper and less stressful to get it right from the start.

Keeping Records

Keep good records of all your superannuation payments, including who you paid, how much, and when. This is crucial for your BAS and for demonstrating compliance if the ATO ever asks. Good record-keeping also helps you track your expenses and ensure you're meeting your obligations accurately.