Super guarantee changes 2025: What employers need to know

Published Wednesday 10 September 2025

Table of contents

• What is the superannuation guarantee?
• Understanding the 2025 SG rate increase
• Key dates and deadlines for employers
• Impact of super guarantee increase on employers
• Calculating super contributions and the maximum base
• Practical steps for employers to prepare
• Why choose Xero for superannuation compliance?
• FAQs about the 2025 superannuation guarantee changes

Key takeaways

• The superannuation guarantee (SG) rate will increase from 11.5% to 12% on 1 July 2025.
• It’s essential to update your payroll software and make superannuation contributions on time to avoid ATO penalties.
• Xero accounting software follows the SG rate schedule automatically, updating the system to ensure compliance and efficiency for payroll processing.

What is the superannuation guarantee?

The superannuation guarantee (SG) is a government initiative designed to ensure Australians build adequate retirement savings. The Australian Taxation Office (ATO) manages this fund for citizens and permanent residents until it becomes available for withdrawal, usually after retirement.

It’s mandatory for employers to make contributions based on employees’ ordinary time earnings (OTE), which include salary, wages, bonuses, and commissions, but not overtime earnings.

Understanding the 2025 SG rate increase

The rate increase from 11.5% to 12% is effective 1 July 2025.

There has been an SG rate schedule increase of 0.5% every year since 2021, but the ATO plans to maintain the 12% rate until at least 2028.

• 1 July 2022 — 30 June 2023: 10.5%
• 1 July 2023 — 30 June 2024: 11%
• 1 July 2024 — 30 June 2025: 11.5%
• From 1 July 2025: 12%

The super guarantee changes 2025 mean that for every $100 of OTE, you will contribute $12 to your employees’ superannuation retirement fund.

Key dates and deadlines for employers

The annual rate increase from 11.5% to 12% takes effect 1 July 2025. Ordinary time earnings (OTE) paid on or after will use the new rate regardless of when employees completed the work.

To meet your employer super obligations, you must make quarterly super payments on time. Missing a due date or contributing less than 12% can result in ATO penalties and charges.

Standard quarterly payment deadlines are 28 days after quarter end. This will affect Q3, with the first payment deadline on 28 October 2025.

Employers must ensure the contributions are in the super fund by the deadline. It’s not enough to process or send them by that date.

Impact of super guarantee increase on employers

The superannuation guarantee rate increase to 12% means the total super contribution you must pay on eligible employee earnings goes up.

Xero payroll software automatically updates the SG rate, reducing or eliminating the need for manual calculations. This saves time and ensures you stay compliant without needing to change every employee record. If you still manage your payroll manually, be sure to update your spreadsheets before the first pay run on or after 1 July.

The new 12% super guarantee rate may have implications for employment contracts and remuneration structures. For example, an employee with a total remuneration package that includes base salary and benefits will see a decrease in their take-home pay. The higher ATO superannuation contribution reduces the portion of the total package allocated to salary unless you review the contract and increase the package.

It’s important to communicate these changes to employees clearly and consider reviewing contracts, salaries, and wages to accommodate the increase.

Employees with plus super contracts will have the same take-home pay. So the SG rate increase is an additional cost on top of their base salary.

The small 0.5% increase can add-up over time, especially if you have several employees. Updating your forecasts to reflect the higher super contribution can help you manage cash flow for 2025 and beyond.

For example, if you have five employees on a plus super payment package earning $100,000, the increase from 11.5% to 12% is $500 per employee, per year. So you need to factor $2,500 into your annual budget and cash flow projections.

Here’s more information from the ATO about how much super to pay.

Calculating super contributions and the maximum base

Calculating SG contributions

To calculate the correct contribution for SG compliance, you can use this simple formula:

Ordinary time earnings (OTE) x 12% = SG contribution

OTE includes salary, wages, commissions, shift loadings, and some allowances, but not overtime.

Identifying the maximum super contribution base

The maximum super contribution base caps the amount of earnings on which employers must pay. For 2025/26, the max is $62,500 per quarter.

At the 12% rate, this breaks down to a maximum SG contribution of $7,500 per employee, per quarter.

$62,500 x 12% = maximum super contribution base

You can choose to contribute more than the mandatory amount, but it’s not a legal requirement.

Here’s more information from the ATO about key super rates and thresholds.

Practical steps for employers to prepare

1. Update payroll settings

Confirm that all employee superannuation details are accurate.

If you use Xero, the SG rate will update automatically. However, you should still check custom superannuation pay items that might not have auto-calculate settings.

If you run payroll manually, be sure to update the 12% rate for correct calculations for super on 1 July 2025 and beyond.

2. Communicate with employees

Let employees know about the change, especially those on inclusive packages. Use email, call a meeting, or send an internal newsletter to explain the increase, when it starts, how it benefits their retirement, and who to contact with questions.

3. Review cash flow planning

Estimate the extra cost of the 0.5% increase and adjust budget and cash flow forecasts for 2025 and 2026.

4. Consider payroll software solutions

Xero automates SG calculations and super payments, integrates with SuperStream for easy reporting, and ensures ATO SG compliance. It also provides support for future requirements like payday super — a change that may come into effect July 2026.

5. Seek professional advice

Consult an accountant or bookkeeper for personalised advice, especially for complex contracts. They can help you plan with confidence and stay compliant.

Here’s a list of accountants and bookkeepers in Australia.

Why choose Xero for superannuation compliance?

Switch to Xero to stay ahead of superannuation changes, improve payroll efficiency, and ensure ATO compliance.

• Automation: Xero automatically updates the SG rate to comply with ATO requirements. It also calculates contributions automatically, reducing manual errors.

• Efficiency: Xero streamlines payroll processing and is SuperStream compliant, allowing you to lodge and pay super contributions directly.

• Compliance: Xero helps you meet ATO deadlines and contribution expectations to avoid penalties.

• Integration: Xero’s payroll system connects to other aspects of your accounting software seamlessly to provide a holistic view of your business finances.

• Resources: Xero offers guides, detailed how-to articles, and customer support to help you navigate changes like the 2025 SG rate increase.

• Scalability: Xero’s payroll tools scale with your business, whether you have one employee or a growing team.

FAQs about the 2025 superannuation guarantee changes

When does the super guarantee rate increase to 12%?

The superannuation guarantee rate increases to 12% on 1 July 2025. The new rate applies to all ordinary time earnings (OTE) paid on or after that date, regardless of when employees completed the work.

What happens if I don't update my payroll system for the new rate?

If you fail to update your payroll system to the new 12% rate, you won’t meet employer super obligations. The ATO will impose a super guarantee charge (SGC), which includes the amount you should have paid, 10% annual interest, and a $20 administration fee per employee, per quarter.

You may also incur other penalties if you don’t pay the SGC or don’t pay into your employees’ superannuation fund by the quarterly deadline. So it’s essential to ensure your payroll software is up-to-date for the 12% super guarantee increase.

Do I need to pay super on overtime hours?

No, you don’t need to pay superannuation on overtime hours as they are not ordinary time earnings (OTE). However, you will still make super contributions on allowances, loadings, and commissions if they are part of OTE.

How will payday super affect my business in 2026?

Payday super may come into effect 1 July 2026, depending on a final government decision. This new measure would require employers to pay superannuation contributions with every payroll rather than quarterly.

Consider how you might adapt your cash flow management and payroll processes to adapt to this change if the new ATO superannuation policy goes into effect.

What is the maximum super contribution base for 2025-26?

The maximum super contribution base for 2025-26 is $62,500 per quarter. This means the maximum SG payment you need to make per employee is $7,500 per quarter.

The ATO sets this limit to cap the earnings subject to super contributions. Employers do not need to pay super on any earnings that exceed this quarterly threshold.

Does the increase affect employees on 'super inclusive' salary packages?

Yes. Because the total remuneration package stays fixed, employees will receive less take-home pay when a higher portion of the total goes to their superannuation fund. You can review and increase the total package to find a fair payment plan that considers the super guarantee rate increase. Clear communication with employees on super inclusive packages is vital for transparency.