Check you are paying the right amount of superannuation to employees. This sounds easy and simple, right? Well it’s not always as straightforward as you might think and you don’t want to be paying your employees too much or too little superannuation.
Check the employee has earned the minimum amount for the month before you pay superannuation. Generally speaking an employee only needs to be paid superannuation if they are paid $450 or more in a calendar month.
Check the age of the employee. If you have employees under the age of 18, you generally only need to pay superannuation if they are paid $450 or more in a calendar month and work more than 30 hours in a week.
Check if the employee has been paid the maximum Superannuation Guarantee contribution for the quarter. Generally speaking, the maximum amount of superannuation you need to pay each quarter to an employee is $4,903.90. This works out to be $19,615.60 per year and is indexed each year. If you have employee’s in this situation, it is wise to check the wording employee’s contract – does their salary package say it includes or excludes superannuation? If it says for example you are paying them $300,000 excluding superannuation, you may be able to pay the maximum Superannuation Guarantee contribution for the quarter. If it says for example you are paying them $300,000 including superannuation, and you pay the maximum Superannuation Guarantee contribution for the quarter, you need to make sure they are still getting their total salary package of $300,000.
Check the types or wages your employee’s are being paid. Superannuation does not need to be paid on all wages. For example, you do not need to pay superannuation on overtime wages. Superannuation only needs to be paid on ordinary times earnings (OTE). The ATO has a good checklist which you can check to see if the wages you are paying are OTE. See the list here.
Check to see if your employees need to be paid superannuation monthly. There are still some EBAs and awards which require you to pay superannuation monthly. Check to see if any of your employees are on these EBAs or awards.
Ensure you pay superannuation by the due date. This is very important. Employees are becoming more empowered about their knowledge and rights of superannuation. They are checking their superannuation balance more frequently, and if employers are not paying, they are lodging a complaint with the ATO to investigate employers.
Trevor Cairney, CPA
This blog is general advice only and does not take into account your particular circumstances, such as your objectives, financial situation and needs.