Superannuation Guarantee 2026: 12% Rate Complete Guide

Employers in Australia must contribute 12% of eligible wages to superannuation from 1 July 2025. This guide explains the legal basis, the phased rate increases, and employer obligations. Key points: SG contributions are based on ordinary time earnings (OTE), which includes salary, commissions and regular allowances but generally excludes overtime. Employers must pay SG at least quarterly (due on the 28th day after each quarter) or monthly if preferred.

From 1 July 2026, under the new “Payday Super” rules, contributions must be paid within 7 business days of each payday. The maximum contribution base is $62,500 per quarter (for FY2025/26) and from 1 July 2026 an annual cap of $250,000 applies. This article covers calculation methods (including examples), payment deadlines, STP reporting, SG on leave and termination, contractor rules, contribution caps and tax treatment, SGC penalties, common pitfalls, and an employer checklist.

What is the Superannuation Guarantee (SG) rate?

The Superannuation Guarantee (SG) is mandated by the Superannuation Guarantee (Administration) Act 1992. The SG rate has been rising gradually. Parliament and ATO guidance confirm the schedule:

• 1 July 2021 – 30 June 2022: 10.0%
• 1 July 2022 – 30 June 2023: 10.5%
• 1 July 2023 – 30 June 2024: 11.0%
• 1 July 2024 – 30 June 2025: 11.5%
• From 1 July 2025: 12.0%.

This completes the legislated increase to 12%. Important: If an award or registered agreement specifies a higher SG rate, the higher rate must be paid. The table and chart below summarise the timeline of increases.

Who must receive Superannuation contributions?

Almost all employees are entitled to SG contributions at the 12% rate. Under the SG law, employers must pay SG for:

• Employees over 18 years old (any hours worked).
• Employees under 18 who work more than 30 hours per week.
• All types of employees, including full-time, part-time and casual workers.
• Temporary residents and others on valid work visas.

Contractors: Independent contractors who are engaged mainly as labourers (even if they have an ABN) are often treated as employees for SG purposes under the SG Act. In practice, if the work arrangement is essentially a contract of service rather than true business contracting, SG will apply.

Exemptions: No super is required for employees under 18 working ≤30 hours/week, or certain family/domestic workers who fall outside SG rules. (See ATO eligibility tools for specifics.)

The Fair Work Ombudsman notes that SG is a mandatory NES entitlement for eligible employees, aligned with super laws. Employers pay SG in addition to the employee’s ordinary wage.

How to calculate Superannuation contributions?

Ordinary Time Earnings (OTE): SG is calculated on the employee’s OTE – the payments for their ordinary hours of work. This includes: wages, salary, shift and roster allowances, commissions, regular bonuses and most periodic payments for ordinary hours. For example, commissions and piece-rates (if paid for ordinary hours) are included in OTE.

OTE excludes overtime and most termination payments. In general, overtime payments are not part of OTE, so employers do not need to pay SG on overtime hours (unless the award/agreement treats those hours as part of ordinary earnings).

The calculation is straightforward:

SG contribution = (OTE for the period) x (SG rate)

For FY2025/26 (ends 30 June 2026), SG rate = 12%. (See Worked Examples below.)

Salary sacrifice: Employer contributions via salary sacrifice do not reduce the SG obligation. In fact, salary-sacrificed super is treated as an additional employer contribution. The minimum 12% SG must still be paid on the employee’s OTE, then any salary sacrifice contributions are extra (reportable via STP).

What are the minimum and maximum contribution bases (MCB)?

• Minimum base: Generally OTE as above. Some minor allowances (travel, tools, etc.) may be excluded by law unless needed to reach the minimum payment (see SGAA exclusions). If an allowance is omitted incorrectly, underpayment can occur.
• Maximum base (MCB): For FY2025/26 the quarterly MCB is $62,500 per quarter. This means an employer need not pay SG on OTE above $62,500 in a quarter (max SG per quarter $7,500). From 1 July 2026, the MCB shifts to an annual basis of $250,000 (i.e. $30,000/year × 8.33% effective rate, frontloaded). Any OTE beyond that annual cap is not subject to SG.

Concessional contributions cap: SG contributions are concessional contributions for the employee. From 1 July 2024 the cap is $30,000 per year ($27,500 prior years). Exceeding this means extra contributions are taxed. Employers should be aware that high earners may reach caps.

When are the due dates for SG contribution?

Employers must pay SG at least quarterly (or more frequently if they wish). Using SuperStream, payments to the employee’s chosen fund must arrive by the due date. The standard ATO deadlines (until June-2026) are:

• Q1 (1 Jul–30 Sep): due 28 Oct.
• Q2 (1 Oct–31 Dec): due 28 Jan.
• Q3 (1 Jan–31 Mar): due 28 Apr.
• Q4 (1 Apr–30 Jun): due 28 Jul.

If a due date falls on a weekend or public holiday, payment on the next business day is acceptable. Missing a deadline incurs the Superannuation Guarantee Charge (SGC, see below).

Employers may opt to pay more frequently (monthly or on each pay run) to smooth cash flow and prepare for the shift to payday super. Some awards or contracts may also require more frequent SG payments – always check any applicable terms.

From 1 July 2026 (Payday Super): The quarterly cycle ends. Instead, SG must be paid along with each payroll. That is, employers must pay SG contributions by no later than 7 business days after each pay date. (First contributions to a new fund or new employee allow up to 20 days.) For out-of-cycle wages (bonuses, etc.), SG is due by the next regular pay date. Payroll systems must be updated to trigger SG payments every pay.

What is the reporting and STP implications?

SG contributions themselves are not reported line-by-line to the ATO (except via optional SuperStream activity statements). However, single-touch payroll (STP Phase 2) affects SG reporting indirectly: employers must correctly report all payment categories because the SG base (OTE) comes from those categories. Specifically:

• STP Pay Categories: Ordinary wages, bonuses, allowances, overtime, etc., must be mapped to the correct STP categories (W1/W2) so that reported OTE is accurate. Most allowances must be itemised separately under STP Phase 2, affecting what constitutes OTE.
• Finalisation: The annual STP finalisation (due 14 July) will include employees’ SG amounts (as contributions or reportable contributions). Employers should reconcile STP data to ensure SG for the year is correct.
• Future changes: From 1 July 2026, STP will need to handle “Qualifying Earnings” (QE) components for SG. The new SG law requires employers to report the components of QE (OTE, salary sacrifice, etc.) used for SG. This is an upcoming STP Phase 3 requirement.

Employers should verify their payroll software is configured to separate ordinary pay and overtime, correctly code allowances, and handle any reportable employer contributions (salary sacrifice) as required under STP.

Super Guarantee on Leave, Termination and Parental Leave

• Final pay (termination): Employers must pay SG on all final wages and leave payouts, including unused annual leave and long service leave that is paid out on termination. If employment ends mid-period, SG on wages up to that date is due by the normal quarter due date.
• Paid Leave: While on paid annual, personal, or long service leave, SG continues to accrue and must be paid on those paid leave amounts.
• Parental Leave: Employers must pay SG on employer-funded parental leave (if any). Government-funded Paid Parental Leave (PPLSC) now includes a Superannuation Contribution (currently 3% up to the minimum super rate), which the government pays to the employee’s super fund. After 1 July 2025, employer-paid and government-paid parental leave both attract SG-related contributions in line with legislation (PPLSC).
• Absences: SG must be paid on wages for jury duty, worker’s compensation (top-up), and other paid absences, as they are part of OTE.

Contractors vs Employees

Even if a worker is labeled as a contractor, SG may still apply if the person is performing “employee-like” work. The SG Act defines employees broadly to include individuals engaged under contracts for labour. If a contractor is hired principally for their labor (not supplying a service as a business), and paid by labour-based contract, employers should apply SG. Conversely, payments to true contractors (running a business, paid by project) are outside SG.

What are contribution caps and tax treatment?

• Contribution Caps: SG contributions count as concessional (before-tax) contributions for the employee. The general concessional cap is $30,000 per year (FY2026 onward). Amounts above the cap are taxed at the employee’s marginal rate (with 15% offset). The non-concessional cap is $120,000 per year.
• Tax Treatment: SG contributions are tax-deductible for employers and taxed at 15% in the super fund (10% for high-income earners). The employee does not include compulsory SG in assessable income. If SG contributions cause an employee to exceed their cap, it’s the employee’s responsibility to notify the ATO and pay extra tax.
• Medicare Levy and Entitlements: Reportable super amounts (above SG) affect Medicare levy surcharge and government benefits. Proper STP reporting ensures transparency on these.

What is Super Guarantee Charge (SGC)?

If an employer fails to pay SG on time or in full, the ATO imposes the Superannuation Guarantee Charge (SGC). Under the current regime (before July 2026):

• You must lodge an SGC statement for the quarter, pay the shortfall SG plus interest (10% p.a.) and an admin fee ($20 per employee per quarter).
• The SGC (shortfall + interest + fee) is not tax deductible. Only on-time SG payments are deductible.
• Penalties: If the SGC statement is lodged late or unpaid, penalties up to 200% of the unpaid SG can apply, and responsible persons (e.g. directors) can be personally liable.

From 1 July 2026 under payday super, the SGC framework will change (interest on daily GIC rates, reduced admin fee, etc.). Notably, after July 2026 the core SGC amount (shortfall) becomes tax deductible, but late-payment penalties do not.

Recordkeeping: Employers should keep comprehensive records of SG calculations and payments. Pay slips should show salary sacrifice and any reportable contributions, and employers must retain SG payment receipts or SuperStream records. Under single-touch payroll, much of this is reported electronically, but auditors will expect matching STP and payment records.

Common Employer Mistakes and Audit Risks

• Misclassifying earnings: Treating overtime or some allowances as OTE (or vice versa). Remember overtime is generally excluded from OTE.
• Incorrect employee classification: Failing to pay SG on casuals, part-timers or young workers who exceed 30 hours/week (under-18 rule).
• Leave and termination errors: Omitting SG on termination payouts or unpaid leave converted to payout.
• Underpaying or late paying: Missing a quarterly deadline (triggering the SGC). Many employers audit payroll only annually and miss SG for a quarter.
• Ignoring caps: Not applying the MCB ($62,500/qtr, then $250k/yr) correctly for high earners.
• Payroll setup: Not updating payroll software for the SG rise to 12% or for Payday Super (post-July 2026). This can lead to systemic underpayments.
• Documentation lapses: Poor record-keeping of fund choice, choices forms, and payment proof invites penalties.

The ATO uses STP data to identify late or short SG payments. Non-compliance can lead to expensive audits and backdated SGC charges.

Worked Examples

Notes: In these examples, overtime pay ($150) is excluded from OTE, so SG is paid only on the $500 base. Commissions and regular bonuses would similarly be included in OTE, whereas genuine overtime is not. Each SG contribution is 12% of the OTE base (e.g. $500×12% = $60).

Employer Compliance Checklist

Before paying your next quarter’s SG, ensure:

• Correct SG rate: Verify the rate for the period (12% for wages paid on/after 1 July 2025).
• Eligible staff: Identify all employees (and contractors-as-employees) who must receive SG. Do not miss casuals, interns, apprentices, etc.
• Over-18 rule: For under-18s, confirm if they worked >30 hours/week (if not, SG may not apply).
• Applicable earnings (OTE): Ensure payroll codes capture OTE properly (include allowances, commissions; exclude overtime).
• Minimum engagement: If employees were paid less than the minimum shift hours (2–4 hours depending on site size), top up the SG on the minimum pay.
• Payment timing: Schedule SG payments so funds are received by the due date (28 Oct/Jan/Apr/Jul currently).
• Payday Super readiness: (From 1 July 2026) update systems to pay SG every pay day and have the funds reach the super fund within 7 business days.
• STP reporting: Check that STP fields (allowances, salary sacrifice, etc.) are correctly set for SG calculations. Finalise STP by 14 July with correct SG totals.
• Termination/leaves: Calculate and pay SG on final pays, leave payouts and any employer-paid parental leave.
• SGC and Penalties: If any SG was missed, prepare and lodge a Superannuation Guarantee Charge Statement and pay the shortfall with interest.
• Records: Keep payslips, SG contribution schedules, and SuperStream payment confirmations on file.

Compliance with SG laws is mandatory: failure can result in ATO enforcement and director penalties. In practice, investing in reliable payroll software and regular audits can prevent costly mistakes.

FAQs About Super Guarantee

Q1: When does the SG rate become 12%?
A1: From 1 July 2025. All salary and wages paid on or after that date must use the 12% rate. Even if a pay period straddles 30 June, use 11.5% for the portion before 1 July and 12% thereafter.

Q2: Do I pay SG on overtime or bonuses?
A2: No. Overtime is generally not counted in OTE, so SG is not required on genuine overtime hours. However, allowances, loadings and commissions are included if they relate to ordinary hours.

Q3: Must I update payroll software?
A3: Yes. Ensure your payroll system is updated for the 12% rate by early July 2025. Xero and other major systems updated automatically, but manual payrolls must be changed. If not updated, you may incur the Super Guarantee Charge on the shortfall.

Q4: What are the SG payment deadlines?
A4: Until June 2026, pay SG quarterly: Jul–Sep by 28 Oct, Oct–Dec by 28 Jan, Jan–Mar by 28 Apr, Apr–Jun by 28 Jul. After 1 July 2026, SG is paid each payday (within 7 business days of the pay date) under the new “Payday Super” rules.

Q5: How does SG apply on termination?
A5: SG must be paid on the employee’s final wages, including any unused leave paid out. Include those amounts in the OTE calculation and pay by the next due date. The $450 exemption does not apply, so even very small final payments still attract SG.

Q6: What happens if SG is paid late?
A6: Late payment incurs the SGC. You must lodge an SGC statement, pay the unpaid super plus 10% interest and a $20 fee per employee per quarter. Continued failure may lead to penalties up to 200% of the unpaid amount. The core SGC amount is not deductible (pre-2026), so prompt payment of SG is critical.

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