How to pay super: guide for employers in Australia

Published Wednesday 27 May 2026

Table of contents

• What is superannuation and who do you pay it for
• How much super you need to pay
• How to pay your employees' super
• Super payment deadlines and penalties
• Payday super: what changes from 1 July 2026
• Record-keeping and reporting
• Simplify super payments with Xero
• FAQs on paying superannuation

Key takeaways

• The super guarantee (SG) rate is 12% of ordinary time earnings (OTE) as of 1 July 2025, and you must pay it for most employees aged 18 and over, regardless of how much they earn
• You need to pay super quarterly by the 28th day after each quarter ends, using a SuperStream-compliant method such as payroll software or a clearing house
• From 1 July 2026, Payday Super replaces the quarterly schedule, requiring you to pay super on or within seven business days of each payday
• Missing a super deadline triggers the super guarantee charge (SGC), which includes the shortfall amount, interest, and an administration fee per employee, and is not tax deductible

What is superannuation and who do you pay it for

Superannuation (super) is Australia's compulsory retirement savings system. As an employer, you are legally required to pay a percentage of each eligible employee's earnings into their nominated super fund.

According to Xero Small Business Insights, small business employment grew 3.4% year-on-year in the December quarter of 2025; the strongest result in two years. This means more employers are taking on staff and managing superannuation obligations for the first time.

Getting super right protects your employees' retirement savings and keeps your business compliant with the Australian Taxation Office (ATO) requirements. Understanding your superannuation compliance obligations is the first step.

Which workers are eligible for super

You must pay super for employees who are 18 years or older, regardless of whether they work full-time, part-time, or casually. There is no minimum earnings threshold.

For employees under 18, you only need to pay super if they work more than 30 hours in a week. Some contractors may also be eligible if they are paid mainly for their labour, even if they have an Australian Business Number (ABN). If you are unsure whether someone is a contractor or employee, this can directly affect your super obligations. You can learn more about what an ABN is and how it affects your obligations.

If you are unsure whether a worker qualifies, the ATO's super guarantee eligibility decision tool can help you work it out. The Fair Work Ombudsman also provides guidance on employer super obligations.

The super guarantee rate

The super guarantee rate is currently 12% of an employee's ordinary time earnings (OTE). This rate took effect on 1 July 2025, up from 11.5% in the previous financial year.

The SG rate has gradually increased from 9.5% in 2020–2021, rising by 0.5 percentage points each year since July 2021. At 12%, the rate has reached the level originally legislated under the Treasury Laws Amendment (Your Future, Your Super) Act. You can read more about the super guarantee changes and what they mean for your business.

How much super you need to pay

Your super obligation is calculated as 12% of each employee's OTE. OTE includes their base salary or wages, paid leave (annual leave, sick leave, long service leave), allowances that are part of their ordinary hours, and shift loadings.

Overtime payments, one-off termination payments, and expense reimbursements are generally not included in OTE. The ATO's guide on how much super to pay provides the full breakdown of what counts.

According to Xero Small Business Insights, small business wages grew 2.8% year-on-year across October and November 2025. With both pay and the SG rate rising, your total super costs are likely increasing, making accurate calculations essential.

Here is a worked example. If your employee earns $65,000 per year in OTE, the super calculation is: $65,000 x 12% = $7,800 per year, or $1,950 per quarter.

Calculating super on overtime, bonuses, and leave

Some payments beyond base salary also attract super. Bonuses tied to ordinary hours of work, commission, and paid leave loading are generally considered part of OTE and require super contributions.

Overtime hours are typically excluded from the OTE calculation, even if the employee regularly works overtime. However, some enterprise agreements or awards may define overtime differently, so check the terms that apply to your employees.

You may need to pay super on lump sums for unused annual leave or long service leave at termination. It depends on whether the leave would have attracted super had it been taken during employment. The ATO provides detailed guidance to help you determine which payments are included.

How to pay your employees' super

Paying super involves setting up the right fund, collecting employee details, and sending payments through a compliant channel. Here are the four steps to follow.

1. Set up a default super fund and offer employee choice

You need a default super fund for employees who do not choose their own. Your default fund must be a complying fund that offers a MySuper product.

You must also give eligible employees the opportunity to choose their own super fund. Provide them with a Standard Choice Form within 28 days of their start date. Your hiring employees checklist should include this step alongside other onboarding tasks. If they do not make a choice and do not have a stapled fund, their super goes to your default fund.

2. Check for stapled super funds

Before putting a new employee into your default fund, you need to check whether they have a stapled super fund. A stapled fund is an existing super account linked to the employee from a previous job.

You can request stapled fund details through ATO Online Services for Business or your registered tax agent. This step applies when a new employee has not nominated a fund of their own. If the ATO returns stapled fund details, you must pay their super into that fund.

3. Collect fund details and calculate super

For each employee, you need four key details to make super payments: their tax file number (TFN), the fund's ABN, the fund's unique superannuation identifier (USI), and their member number.

Employees provide these details through their Standard Choice Form or Tax File Number Declaration. Calculate 12% of each employee's OTE for the relevant period. Using online payroll software can help you track these details and automate the calculation each pay cycle.

4. Make payments through SuperStream

All super payments must be made electronically through SuperStream, the ATO's data and payment standard. You cannot pay super by cheque or direct deposit to a fund without the accompanying SuperStream data.

You have three main options for SuperStream-compliant payments:

• Payroll software with built-in SuperStream capability
• A commercial clearing house that distributes payments to multiple funds
• The ATO's Small Business Superannuation Clearing House (SBSCH), available if you have 19 or fewer employees or annual turnover under $10 million

The ATO's SBSCH is closing on 1 July 2026. If you currently use it, start transitioning to an alternative SuperStream method before that date.

Super payment deadlines and penalties

Under the current quarterly system, you must pay super contributions by the 28th day after the end of each quarter. The due dates are:

• Quarter 1 (1 July to 30 September): due 28 October
• Quarter 2 (1 October to 31 December): due 28 January
• Quarter 3 (1 January to 31 March): due 28 April
• Quarter 4 (1 April to 30 June): due 28 July

These quarterly deadlines remain in place until 30 June 2026. Super must be received by the fund by the due date, not just sent, so allow processing time. You can find the full schedule on the ATO's super payment due dates page.

The super guarantee charge explained

If you miss a deadline or pay less than the required amount, the ATO may impose the super guarantee charge (SGC). The SGC is made up of several components and is more costly than simply paying the original amount late.

The SGC shortfall is calculated on total salary and wages, not just OTE. It also includes a choice liability component capped at $500 per employee per quarter. On top of that, nominal interest of 10% per year applies from the start of the quarter, plus a $20 administration fee per employee per quarter.

The SGC is not tax deductible. You must lodge an SGC statement with the ATO, and penalties can apply for late or non-lodgement. Paying on time is always the most cost-effective approach.

Payday super: what changes from 1 July 2026

From 1 July 2026, the way you pay super is changing. Under Payday Super, you will need to pay super at the same time as wages, rather than quarterly. Find out how to prepare for payday super with Xero.

Specifically, super contributions must be received by the employee's fund within seven business days of each payday. This applies to all employers, regardless of business size.

Under Payday Super, your employees will see their super balance grow with every pay cycle. Late payment penalties will also shift to a per-payday basis rather than quarterly. The ATO's SBSCH will close on 1 July 2026, so you will need an alternative SuperStream-compliant payment method in place.

To prepare, review your current payroll processes and ensure your payroll software supports payday-frequency super payments. Starting your transition well before July 2026 will help you avoid disruption.

Record-keeping and reporting

Accurate records are both a legal requirement and a practical safeguard for your business. You must keep super-related records for at least five years. The clock starts from the date you make each contribution or when the record is created, whichever is later.

Your super records should include:

• The amount of super calculated for each employee per pay period
• The dates contributions were paid and received by the fund
• Fund details (name, ABN, USI, and member number) for each employee
• Any employee choice of fund documentation

You must also report super information to the ATO through Single Touch Payroll (STP). STP sends your payroll data, including super liability amounts, directly to the ATO each time you run payroll. Learn more about how Single Touch Payroll works and what you need to report.

Simplify super payments with Xero

Managing super across multiple employees, funds, and deadlines can be time-consuming. Xero's payroll software can help you automate super calculations at the current SG rate. It also processes SuperStream-compliant payments and keeps your STP reporting up to date.

With everything in one place, you can spend less time on manual admin and more time running your business. Get one month free.

FAQs on paying superannuation

Here are answers to frequently asked questions about paying superannuation.

Do I need to pay super for contractors?

It depends on the nature of the arrangement. If a contractor is paid wholly or principally for their labour, you may need to pay super for them even if they have an ABN. The ATO's eligibility decision tool can help you determine whether a specific contractor qualifies.

What is a stapled super fund?

A stapled super fund is an existing super account that follows an employee from job to job. If a new employee has one, you must pay their super into that fund rather than your default fund.

Do I pay super on overtime and bonuses?

Overtime hours are generally excluded from the OTE calculation, so they typically do not attract super. Bonuses tied to ordinary hours are usually included in OTE and do require super contributions.

What happens if I miss a super payment deadline?

You will be liable for the super guarantee charge (SGC), which includes the shortfall on total salary and wages, nominal interest, and a $20 administration fee per employee per quarter. The SGC is not tax deductible.

Can I claim tax deductions on super payments?

Yes, super contributions paid on time and in full are generally tax deductible. However, if you miss the deadline and incur the SGC, those payments lose their deductibility.

What is Payday Super?

Payday Super starts on 1 July 2026 and requires employers to pay super at the same time as wages, rather than quarterly. Contributions must reach the employee's fund within seven business days of each payday.