Super guarantee: rate, deadlines and how much to pay
Learn how the 12% super guarantee rate affects your payroll, costs, and what you need to do.
Written by Naomi Lai— Small business & finance writer. Read Naomi's full bio
Published Tuesday 21 April 2026
Table of contents
Key takeaways
- Calculate the extra cost of the July 2025 super guarantee increase to 12% by multiplying each employee's ordinary time earnings by 0.5%, then update your budget and cash flow forecasts before your first July pay run.
- Pay super contributions so they reach employees' funds within 28 days after each quarter ends, as late payments trigger the super guarantee charge, which includes 10% annual interest and a $20 administration fee per employee, per quarter.
- Review employment contracts to understand who absorbs the rate increase: employees on total package contracts receive less take-home pay, while you bear the extra cost for employees on plus super arrangements.
- Prepare for the shift to payday super from 1 July 2026, when you'll need to pay super with every pay cycle rather than quarterly, making payroll software that automates super calculations worth considering now.
Key takeaways
- Calculate the financial impact of July 2025's 0.5% increase on your business by reviewing employee contracts and adjusting budget forecasts, especially for employees on plus super arrangements where you now bear the additional cost.
- Ensure superannuation contributions reach employees' funds within 28 days after each quarter end to avoid the super guarantee charge, which includes 10% annual interest and a $20 administration fee per employee.
- Communicate the rate change clearly to employees, particularly those on total package contracts who see reduced take-home pay as more money goes to their superannuation fund.
Now that you know the key points, let's explore the details of superannuation guarantee requirements.
What is the superannuation guarantee?
Superannuation guarantee (SG) is Australia's mandatory retirement savings system. It requires employers to contribute a minimum percentage of eligible employees' ordinary time earnings (OTE) to their super fund. The current rate is 12%. The ATO oversees this system to ensure all working Australians build retirement savings.
Employers must contribute based on ordinary time earnings (OTE). The following payments count toward OTE:
- Base salary and wages: Regular pay for standard work hours
- Bonuses and commissions: Performance-based payments
- Allowances and loadings: Additional payments forming part of regular earnings
Exclude overtime payments from your OTE calculations, as they fall outside super guarantee requirements.
Eligibility rules determine which employees must receive super contributions.
Who is eligible for super guarantee?
Employee eligibility for super guarantee depends on age and hours worked. You must pay super for employees who meet these criteria:
- Employees 18 and over: Eligible regardless of how much they earn
- Employees under 18: Eligible if they work more than 30 hours in a week
These rules apply to full-time, part-time, and casual employees.
Understanding the current rate helps you calculate your obligations accurately.
What is the super guarantee rate for 2025?
The super guarantee rate is 12% as of 1 July 2025. This rate applies to all ordinary time earnings and will remain at 12% until at least 2028.
Here's how the rate increased over recent years:
- 2022–23: 10.5%
- 2023–24: 11%
- 2024–25: 11.5%
- 2025–26 onwards: 12%
For every $100 of OTE, you contribute $12 to your employees' super fund.
Once you know the rate, you can calculate the exact amounts for each employee.
How much super to pay
Working out how much super to pay is straightforward once you know your employees' ordinary time earnings. You simply multiply their earnings by the current super guarantee rate.
Calculating your super guarantee contributions
Use this basic formula to calculate your super guarantee contributions:
Super guarantee formula: Ordinary time earnings × 12% = required contribution
Here are two examples based on different pay frequencies:
Monthly example:
- employee earns $5,000 per month in OTE
- monthly super: $5,000 × 12% = $600
- quarterly total: $600 × 3 = $1,800
Fortnightly example:
- employee earns $2,500 per fortnight in OTE
- fortnightly super: $2,500 × 12% = $300
- quarterly total (6.5 fortnights): approximately $1,950
Understanding the maximum contribution base
The maximum super contribution base for 2025–26 is $62,500 per quarter. This means you pay super on earnings up to this amount only, which aligns with the ATO's quarterly maximum super contribution base limit.
Key points about the cap:
- Maximum quarterly contribution: $7,500 per employee (12% of $62,500)
- Annual earnings threshold: $250,000
- Earnings above the cap: Super is optional for earnings above this amount, though you can make voluntary contributions
Super contributions apply only to earnings up to this threshold. The ATO sets this limit to cap the earnings subject to mandatory contributions.
Timing is critical for super compliance.
When to pay super contributions
Super contributions must reach the fund within 28 days after each quarter ends. The funds must arrive in the employee's super account by the deadline, not just be sent or processed.
Quarterly deadlines for 2025–26:
- Q1 (July–September): Due 28 October 2025
- Q2 (October–December): Due 28 January 2026
- Q3 (January–March): Due 28 April 2026
- Q4 (April–June): Due 28 July 2026
Late payment penalties: If contributions arrive after the deadline, the ATO may apply the super guarantee charge (SGC). This includes the unpaid amount, 10% annual interest, and an administration fee of $20 per employee, per quarter.
Beyond deadlines, you need to understand how the rate increase affects your business costs.
Impact of super guarantee increase on employers
The 0.5% rate increase adds $500 per year for every employee earning $100,000. For someone on $100,000 annually, your contribution rises from $11,500 to $12,000.
How different payroll systems handle the update:
- Xero: Updates the rate automatically on 1 July 2025
- Manual payroll: Requires you to update spreadsheets before your first July pay run
- Other software: Check with your provider to confirm automatic updates
Contract type determines who absorbs the cost increase:
- Total package contracts: Employees receive less take-home pay as more goes to super
- Plus super contracts: Employees keep the same take-home pay, but your costs increase by 0.5%
Review your employment contracts and communicate these changes clearly to affected employees.
Budget for an extra $500 per employee, per year if they're on plus super contracts earning $100,000.
For example, five employees on plus super packages at $100,000 each means an additional $2,500 in annual super costs. Update your cash flow forecasts to reflect this increase for 2025–26 and beyond.
Taking proactive steps helps you manage these changes smoothly.
Practical steps for employers
Here are the key actions to take as the super guarantee rate increases.
Communicate with employees
Inform employees about the rate change, especially those on total package contracts who may see reduced take-home pay.
Communication options:
- Send an email explaining the increase and when it started
- Hold a team meeting to answer questions
- Share an internal newsletter outlining how the change benefits their retirement
- Provide a contact person for follow-up questions
Review cash flow planning
Calculate the total cost increase across your workforce and adjust your forecasts accordingly.
Steps to update your cash flow planning:
- Multiply each employee's annual OTE by 0.5% to find the additional cost
- Add up the total increase across all employees
- Update your 2025–26 budget and quarterly cash flow projections
Consider payroll software solutions
Xero automates super guarantee calculations and super payments. It integrates with SuperStream for easy reporting and helps you meet ATO requirements.
Xero also prepares you for upcoming changes. Since the Australian Parliament passed Payday Super legislation, from 1 July 2026, employers will be required to pay super with every pay cycle instead of quarterly.
Seek professional advice
Consult an accountant or bookkeeper for personalised advice, especially for complex contracts. They can help you stay compliant.
Find a registered tax or BAS practitioner through the Tax Practitioners Board public register.
With the right preparation, you can handle these changes effectively.
Managing super guarantee changes with confidence
Understanding your super guarantee obligations and preparing your payroll in advance helps you manage changes smoothly and avoid contributing to the over $6 billion in unpaid superannuation estimated by the ATO. Smart accounting software automates these calculations, saving you time and reducing compliance risk.
Xero helps you stay ahead of superannuation changes and meet ATO requirements. Get one month free to see how it simplifies your payroll.
FAQs on 2025 superannuation guarantee changes
Here are answers to common questions about the 2025 super guarantee changes.
Disclaimer
Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.
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