Superannuation Guarantee Calculator

Understanding Ordinary Time Earnings

Ordinary Time Earnings (OTE) is the standard term used in Australian superannuation law to describe the amount you pay an employee for their ordinary hours of work. Under the Superannuation Guarantee (Administration) Act 1992, you must calculate your 11% (current rate) superannuation guarantee contribution based on OTE.

For tradespeople and small business owners, getting OTE right is critical. The Australian Taxation Office (ATO) uses OTE to work out if you have paid enough super. If you miss items that should be included, you will likely face a Superannuation Guarantee Charge, which includes interest and administration fees.

What is included in OTE

You must calculate super on payments made for ordinary hours of work. This is more than just the base hourly rate. If a payment relates to the work an employee performs during their normal rostered shifts, it is almost certainly OTE.

Common inclusions for tradies and small businesses include:

• Wages and salaries: The hourly rate or weekly salary for ordinary hours.
• Commissions and bonuses: Any incentive payments based on performance or targets.
• Shift loadings: Extra pay for working evening, night, or weekend shifts during ordinary hours.
• Allowances: Allowances paid for specific qualifications or special duties. If you pay an allowance to recognise the skill level of a tradesperson, it is OTE.
• Overtime: Overtime payments are included if the employee cannot specifically separate the overtime amount from the ordinary hours pay on their payslip.
• Paid leave: Payments for annual leave and long service leave.
• Leave loading: The extra 17.5% often paid on top of annual leave.

What is excluded from OTE

Certain payments are specifically excluded under the regulations. You generally do not pay super on these amounts, provided they are clearly separate from ordinary pay.

Common exclusions include:

• Overtime: If the overtime hours and pay are clearly recorded separately from ordinary hours on the pay record, these amounts are exempt.
• Unpaid leave: You do not calculate super on hours the employee did not work.
• Reimbursements: Money paid back to an employee for out-of-pocket expenses, such as buying materials or tools for the job. This is not income.
• Expense allowances: Travel, meals, and tool allowances if they are genuinely reimbursing the employee for costs incurred while doing their job.
• Director fees: Fees paid to a non-executive director (note this is complex and usually handled differently than employee wages).

The ATO rule of thumb

The ATO applies a simple test if you are unsure. If you calculate income tax or Pay As You Go (PAYG) withholding on a payment, you should generally calculate superannuation on it as well. Always check your payroll records to ensure overtime is recorded separately. If you pay a flat rate that covers both ordinary hours and overtime without a breakdown, you must pay super on the entire amount.

The Superannuation Guarantee (SG) rate is not a fixed figure. It changes based on government policy outlined in federal legislation. As an employer, you must stay on top of these percentages because you are legally liable for any shortfall. Under the Superannuation Guarantee (Administration) Act 1992, you must pay the correct percentage of an employee's Ordinary Time Earnings (OTE) into a complying super fund. This applies to full-time, part-time, and casual staff if they earn more than $450 per month.

Here are the SG rates for the current and previous financial years.

• 1 July 2024 to 30 June 2025 (Current): 11.5 per cent
• 1 July 2023 to 30 June 2024: 11.0 per cent
• 1 July 2022 to 30 June 2023: 10.5 per cent
• 1 July 2021 to 30 June 2022: 10.0 per cent

If you are processing payroll now for the 2024-25 financial year, ensure your accounting software is set to 11.5 per cent. Do not rely on memory. A common error is applying the old rate, which leaves you with a debt to your employees. Under the Superannuation Guarantee (Administration) Act 1992, you must pay the current rate for the year the work is performed, not the rate from when the employee started.

Legislation mandates further increases for the next two financial years. You need to budget for these hikes now.

• 1 July 2025 to 30 June 2026: 12.0 per cent
• 1 July 2026 onwards: 12.0 per cent

The rate is scheduled to cap at 12 per cent from 1 July 2025. This is the final step in the gradual increase schedule that started several years ago.

Understanding OTE is critical. The SG percentage applies to Ordinary Time Earnings. This is usually what your employees earn for their ordinary hours of work. It includes things like commissions, shift loadings, and allowances, but it usually excludes overtime payments. The Australian Taxation Office (ATO) provides detailed guidelines on what constitutes OTE. Misjudging OTE is a leading cause of SG non-compliance for trades and small businesses.

You must pay these contributions quarterly. The due dates are 28 October, 28 January, 28 April, and 28 July. If you miss a due date or pay the wrong percentage, you trigger the Superannuation Guarantee Charge (SGC). The SGC is higher than the ordinary super contribution. It includes the shortfall amount, interest, and an administration fee. You cannot claim a tax deduction for SGC payments. Paying the correct SG rate on time is the only way to claim a tax deduction.

Check your software settings today. Run a test payroll for a typical employee to verify the calculation matches 11.5 per cent. If you are unsure about OTE components, ask your bookkeeper or accountant. The ATO also has tools on their website to help you work it out. Staying compliant protects your business from unexpected tax bills and ensures your employees are funded for their retirement.

You must pay employee superannuation guarantee contributions to a complying superannuation fund by the quarterly cut-off dates. These dates are set by the Australian Taxation Office (ATO) and are non-negotiable. The four quarterly due dates for payment are:

• 28 October for the July to September quarter
• 28 January for the October to December quarter
• 28 April for the January to March quarter
• 28 July for the April to June quarter

If you do not pay the full amount by these specific dates, you are liable for the Superannuation Guarantee Charge (SGC). You can find the specific rules regarding the administration of this charge in the Superannuation Guarantee (Administration) Act 1992.

The SGC is not tax deductible and is higher than the standard superannuation guarantee rate. It includes three components. The first is the shortfall amount, which is the money you should have paid your employees. The second is interest. This is currently set at 10% per annum, calculated daily from the start of the quarter until the payment is made or the due date passes. The third component is an administration fee. This fee is currently $20 for each employee, per quarter, for whom you have a shortfall.

When you miss a payment deadline, you must lodge a Superannuation Guarantee Statement to the ATO. This statement outlines the amounts owed for each employee. You must pay the SGC directly to the ATO rather than to the employee's super fund. Failure to lodge this statement or pay the charge can result in further enforcement action by the ATO, including garnishee notices and the pursuit of debt through the courts.

You should also be aware that the Superannuation Guarantee (Administration) Act 1992 requires you to pay super for eligible employees regardless of whether the business is profitable or cash flow is tight. Some contractors for whom you provide payment mainly for their labour are also considered employees for superannuation purposes under these rules.

To avoid these penalties, many businesses set up a schedule to pay contributions monthly. This spreads the cash flow impact and reduces the risk of missing the quarterly deadline. However, even if you pay monthly, you are still legally required to ensure the contribution meets the quarterly minimum by the 28th day of the following month. If you realize you have missed a deadline, it is best to act immediately. Pay the outstanding amount to the fund as soon as possible and lodge your SGC statement promptly to stop the interest from accruing further.

Superannuation for Contractors

Business owners often mistake contractors for independent workers who do not need super. This mistake can lead to unexpected tax bills. The rules for paying super to contractors depend on the nature of the work performed, not the name of the contract or the invoice issued. You must look past the label of "contractor" and examine the actual working arrangement.

Under the Superannuation Guarantee (Administration) Act 1992, you must pay super contributions for a contractor if the contract is wholly or principally for the labour of the person. This is commonly called the "principally for labour" test. Even if the contractor has an Australian Business Number (ABN) and invoices you for the work, they may still be an employee for super purposes.

To apply this test, check the terms of the contract. You pay super if the contractor is paid for their personal labour and skills. If the contract is mainly about the physical or mental effort of a specific person, rather than a specific result, it usually attracts super. A common example is a tradie hired for their personal time and expertise, rather than a company hired to deliver a complete outcome regardless of who does the work. If the contract requires the contractor to perform the work personally, it strongly suggests the contract is for labour. You also need to consider if the contractor pays their own helpers. If you provide the materials or equipment and the worker just provides the labour, it is likely they are an employee for super.

If a contractor fails the "principally for labour" test, meaning their work is mainly to achieve a specific result and they can delegate the work to others, you generally do not pay them super.

There is a specific exception to these rules known as a voluntary agreement. If a contractor does not meet the "principally for labour" test, you can still choose to pay them super. Both parties must sign a written voluntary agreement. This must state that you will pay the super contribution to a complying super fund for the benefit of the contractor. The contractor provides their tax file number (TFN) and nominated super fund details. Once this agreement is active, you must pay super at the current rate and claim a tax deduction for the contributions. This arrangement can offer flexibility for both the business and the contractor regarding retirement savings.

To avoid penalties, regularly review your working arrangements. The Australian Taxation Office (ATO) views a failure to pay the super guarantee as a serious offence. If you are unsure about the status of a worker, seek professional advice or use the tools available on the ATO website to check your obligations.

You must keep accurate records for all employee superannuation payments. The Australian Taxation Office (ATO) checks these records to ensure you meet your Superannuation Guarantee (SG) obligations. If you fail to keep proper records, you risk penalties and difficulties during an audit.

You must keep records for a minimum of five years. The five years starts from the date you prepared the record or the date the transaction was completed, whichever is later. It is not enough to keep records for only five years after an employee leaves your business. This five-year requirement is outlined in the Taxation Administration Act 1953. If a dispute arises regarding payments, you will need these documents to prove you paid the correct amounts on time.

Your records must be in English and must be in a format that the ATO can access if they ask to see them. You can keep digital records, but you must ensure they are secure and backed up.

For each employee, you must record the following specific information.

Employee details

• Employee name and residential address.
• The date you started paying super for them.
• Their Tax File Number (TFN) or a record of your request for it.
• Their date of birth and employment start date.

Contribution details

• The total amount of super guarantee contributions you paid for each quarter.
• The date you paid the contributions.
• The name of the super fund where you sent the money.
• The fund's unique superannuation identifier (USI) or the superfund product number (SPIN).
• A breakdown of the earnings base used to calculate the contribution, such as Ordinary Time Earnings.

You must keep evidence of the actual payment. A bank statement showing the transaction is the best proof. It must clearly show the amount paid, the date, and the name of the fund.

For the current financial year, the minimum SG contribution rate is 11.5 per cent of an employee's ordinary time earnings. You must pay these amounts to a complying super fund by the quarterly due dates. The due dates are 28 January, 28 April, 28 July, and 28 October.

Check your payroll or accounting software to ensure it captures all the required data automatically. If you use a spreadsheet, set it up to record the USI, payment date, and earnings base for every single transaction. Keep all tax invoices from super funds and payment receipts in a dedicated folder, either digital or physical.

The Superannuation Guarantee Charge is a penalty the Australian Taxation Office (ATO) applies if you do not pay your employees' superannuation guarantee on time and in full.

You must pay superannuation contributions to a complying superannuation fund by the quarterly due dates to avoid this charge. If you miss a due date or pay less than the required amount, you immediately incur a liability for the Superannuation Guarantee Charge. This obligation exists under the Superannuation Guarantee (Administration) Act 1992.

The charge is higher than the superannuation contribution you would have originally paid. It consists of three distinct components.

First, it includes the shortfall amount. This is the total superannuation guarantee amount you did not pay on time. You must calculate this shortfall based on the employees' earnings, which includes ordinary hours of work and any additional amounts considered ordinary time earnings under Australian law.

Second, the charge includes interest. The ATO applies interest on the shortfall amount from the start of the relevant quarter until the date you pay the charge or the date the ATO issues a notice, whichever happens first. The interest rate is set quarterly and is generally higher than commercial interest rates. This component compensates the employee for the lost time their money spent invested in their super fund.

Third, the charge includes an administration fee. This fee is currently $20 per employee, per quarter. It applies for each employee who had a shortfall during that specific period.

A critical difference between paying superannuation contributions and paying the Superannuation Guarantee Charge relates to tax. You can usually claim a tax deduction for superannuation contributions you make on time for your employees. However, you cannot claim a tax deduction for the Superannuation Guarantee Charge. This means paying the charge increases your taxable income and reduces your overall profitability.

If you find yourself in a position where you cannot pay the required superannuation by the due date, you should act immediately. You can voluntarily disclose the shortfall to the ATO. If you lodge a Superannuation Guarantee Statement and pay the charge before the ATO contacts you, you may remit part of the administration fee and interest. This process can significantly reduce the total amount you owe.

However, you must still pay the full amount of the charge before you can claim any tax deductions for late payments. Once you pay the charge to the ATO, you can claim a tax deduction for the employee contribution component, but you still cannot claim a deduction for the interest or the administration fees.