Superannuation Guarantee (SG) legislation, which requires employers to make compulsory super contributions for their employees, can be a tricky area within Australian payroll. Here are three lesser-known aspects:
1. Award and Agreement Variations Can Impact SG
While the SG law sets a base contribution rate (currently 11.5% of ordinary time earnings), some awards and enterprise agreements may require higher rates or contributions on earnings that wouldn’t usually be counted. This means employers under specific awards or agreements may need to go above the legal minimum. Payroll teams should keep a close eye on these variations to avoid non-compliance, which can result in back payments and penalties.
2. Salary Sacrifice Doesn’t Affect SG Contributions
The interaction between salary sacrifice arrangements and SG can be confusing. Under SG law, contributions should be calculated on an employee’s pre-salary sacrifice earnings to prevent employers from reducing their SG contributions if an employee opts for a salary sacrifice arrangement. Misunderstanding this rule can lead to underpayments and compliance issues.
3. Non-Compliance Can Lead to Penalties Beyond Underpaid Super
Failing to meet SG obligations can be costly. The Australian Taxation Office (ATO) enforces a Superannuation Guarantee Charge (SGC) on non-compliance, which includes the shortfall, interest, and an admin fee. Plus, the SGC is non-deductible, increasing the financial impact on employers. Staying on top of SG compliance is essential for payroll professionals to avoid these steep penalties and potential reputational damage.
Knowing these SG details helps payroll teams avoid risks and maintain compliance, highlighting the value of expertise in payroll management.
