Make super payments for my employees

Helping them prepare for the future

Setting up a default fund

As an employer, an important part of your role is to make compulsory superannuation payments to a complying superannuation fund for employees. Usually your employee can choose their super fund, but if they can’t or don’t make a choice, you’ll need to make these payments into what’s known as a default fund or employer-nominated fund.

Depending on your industry, the default fund might be called out in an award or registered industrial agreement. If not, you’ll need to choose the default fund, and the fund will need to be a MySuper fund. A MySuper fund is one that can accept default superannuation contributions and meets specific legal requirements.

When you hire a new employee, generally you’ll need to offer them a ‘standard choice form’ and also tell them what the default fund will be if they don’t make a choice. If they don’t make an active choice, you’ll be able to meet your super obligations by making their payments into the default fund.

How payments for new employees work

Julie owns a dry cleaning business with 12 employees. Business is going well and she has hired Rebecca part time to help operate the business on weekends.

Rebecca is over 18 and is expected to make more than $450 a month. So, Julie is certain that she’ll need to know from the outset where to pay Rebecca’s super payments. She has agreed with Rebecca that she will pay her any super in addition to her wages.

Julie gave Rebecca a ‘standard choice form’ and asked her if she’d like to nominate a super account if she already has one. Rebecca said yes—she’d like Julie to pay her super payments into her existing super fund, WXYZ Super so she filled out the standard choice form with her account details.

At the end of the quarter, Julie calculated how much she would need to pay into Rebecca’s super fund. Rebecca earned $650 per month before tax, or $1950 in the quarter. Julie checked the minimum current superannuation rates on the Australian Taxation Office (ATO) website, which is 9.5%, and 9.5% of $1950 is $185.25. So for the quarter, Julie needs to pay $185.25 to WXYZ Super in Rebecca’s name.

Julie checked the cut-off dates for super payments. For work done in the particular quarter, the cut-off date is the 28th of the following month. Julie promptly made the payment before that date to avoid any interest charges or fees.

Keep on top of your employees’ super to avoid penalties and charges

Sometimes, there’s so much happening in a business that super payments can feel like less of a priority. But the government does charge penalties and interest for late payments, so it’s recommended that you know your obligations and the cut-off dates.

You’ll make super payments on a quarterly basis, unless your fund has different rules: The ATO specifies the government cut-off dates as to when you must make super payments for an employee. However, some super funds suggest that you make monthly payments. This may help you with your cash flow. Make sure you know how frequently you need to make payments.

If your employee is leaving, you’ll need to calculate their final pay and super: If your employee is leaving, they’re still owed any super in addition to their owed wages. An exception is owed annual leave payments. Your leaving employee may be entitled to payments for annual leave, but they will not receive super on top of these payments.

If your business folds, you’ll still owe your employees their super: You’ll need to pay out your employees’ wages and owed super even if you’re exiting your business. If you believe you won’t be able to afford this, then you may need some financial advice on how to manage this as soon as you realise this may be a possibility.

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