Superannuation Guarantee: A Complete Guide for Australian Employers

What the Superannuation Guarantee Is

The superannuation guarantee, usually shortened to SG, is the minimum amount of super an employer must pay on behalf of eligible workers. It is not optional and it is not a deduction from the employee's wage. It sits on top of wages and goes into the worker's nominated super fund. For most Australian small businesses, SG is the single largest on-cost after wages themselves, and it carries some of the harshest penalties in the tax system when it is paid late or short.

Getting SG right is partly a payroll question and partly a bookkeeping one. The calculation has to be correct, the payment has to reach the fund on time, and the figures have to be coded properly in your accounts so your liability and cash position are accurate. This guide walks through each part for an Australian employer in 2026.

The Current SG Rate

The super guarantee rate is 12 percent of ordinary time earnings for the 2025-26 financial year. The rate reached 12 percent on 1 July 2025 after a series of staged increases, and it is now at its legislated maximum, so there are no further scheduled rises. That means for every $1,000 of ordinary time earnings you pay an eligible worker, you owe an additional $120 in super.

If your payroll software still has an older rate stored from a previous year, check it. Paying 11.5 percent when the rate is 12 percent leaves a shortfall that the ATO will treat as unpaid super.

Who Is Eligible

Most employees are entitled to SG. Since 1 July 2022 there is no minimum monthly earnings threshold, so the old rule that excluded workers earning under $450 a month no longer applies. You generally must pay SG for:

• Full-time, part-time, and casual employees
• Employees who are also receiving a pension or annuity
• Some contractors, where the contract is wholly or principally for their labour, even if they quote an ABN
• Workers aged under 18 who work more than 30 hours in a week

The contractor rule catches many small businesses by surprise. If you pay a sole trader mainly for their personal labour rather than to achieve a result, you may owe them SG even though they invoice you. When in doubt, check the ATO's employee or contractor guidance or ask your accountant.

What Counts as Ordinary Time Earnings

SG is calculated on ordinary time earnings, or OTE, not on every dollar you pay. OTE is broadly what an employee earns for their ordinary hours of work. It includes:

• Ordinary hours of pay
• Over-award payments, shift loadings, and most allowances
• Commissions and bonuses tied to ordinary hours
• Paid leave such as annual and sick leave

OTE generally does not include overtime paid at penalty rates, genuine redundancy payments, or reimbursements of expenses. The overtime distinction is where mistakes cluster. If your payroll is not separating overtime correctly, your SG calculation will drift away from the right figure.

When SG Must Be Paid

For most of the 2025-26 year, SG is paid quarterly, and the payment must reach the employee's fund by the due date, not merely leave your bank account by then. The quarterly 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

Because the money has to be received by the fund, and clearing houses can take days to process, you should pay several business days before the deadline. Treating the 28th as the day to press the button is how on-time payments become late ones.

SuperStream

You must pay SG electronically through a SuperStream-compliant channel. SuperStream sends the payment and the matching data to the fund together in a standard format, which is what allows the fund to allocate the money to the right member. Most businesses meet this through their payroll software, through a commercial clearing house, or through the ATO's Small Business Superannuation Clearing House. Paying super by cheque or plain bank transfer outside a SuperStream channel does not meet your obligation.

The Super Guarantee Charge: Why Late Super Is So Costly

If you miss a quarterly deadline, even by a day, the consequences are severe. You become liable for the super guarantee charge, or SGC, which is deliberately more expensive than the super you owed. The SGC is made up of:

• The full SG shortfall, calculated on total salary and wages rather than just OTE, which usually makes the base larger
• Nominal interest of 10 percent per year
• An administration fee per employee per quarter

On top of that, the SGC is not tax deductible, whereas SG paid on time is. You also have to lodge a super guarantee charge statement with the ATO. The practical lesson is simple: paying super on time is far cheaper than paying it late, so build the deadlines into your cash flow planning and never let them slip.

Payday Super From 1 July 2026

The biggest change to the system in years takes effect on 1 July 2026. Under the Payday Super reform, employers will need to pay SG at the same time as wages rather than quarterly. When the change applies, super contributions will need to reach the employee's fund within a short window of each payday rather than waiting until the end of the quarter.

For employers this is a significant shift in both cash flow and process. Super stops being a lump sum you set aside each quarter and becomes a per-pay-run cost that goes out alongside wages. If you currently hold super in your account between quarters, you will need to adjust your cash flow planning before the change takes effect. Talk to your accountant and check that your payroll software is ready, because the systems and clearing houses need to support the faster cycle.

How to Stay on Top of SG

• Reconcile super every pay run. Make sure the SG calculated matches 12 percent of OTE and that your payroll liability account reflects what you owe.
• Pay early, not on the deadline. Allow several business days for the clearing house and fund to process the payment.
• Keep OTE clean. Ensure overtime, allowances, and bonuses are categorised correctly so the calculation is right at the source.
• Watch your contractors. Review whether any contractors are caught by the labour-based SG rule.
• Prepare for Payday Super. Confirm your software and cash flow are ready for the 1 July 2026 change.

Where SortBooks Fits

SortBooks works alongside Xero to keep the bookkeeping side of super accurate. We help ensure your superannuation liability is coded correctly and consistently, flag when a super payable balance does not look right against your payroll, and keep the BAS Excluded treatment of super clean so it never distorts your activity statement. That gives you a reliable picture of what you owe and when.

For most Australian small businesses, the right setup in 2026 is Xero or your payroll system for the SG calculation and SuperStream payment, a registered BAS agent or accountant for advice on eligibility and the Payday Super transition, and an AI bookkeeper like SortBooks keeping the underlying records clean. If you would like to see how your payroll and super coding looks through SortBooks, you can connect a free trial in under five minutes.