The Super Guarantee explained¶

The Super Guarantee — often shortened to SG — is the compulsory minimum amount of super an employer must pay for each eligible employee. It is set by law, so it is not something you choose to offer. If someone is an eligible worker, you must pay their SG.

The amount is worked out from what the employee earns and a set percentage rate. This lesson explains the two parts that make up that sum — the earnings it is based on, and the rate that is applied to them.

In one line

The Super Guarantee is the compulsory minimum super you must pay for eligible employees, worked out on their ordinary time earnings at the rate set by law.

Why this matters¶

The Super Guarantee is the rule that decides how much super you owe. If you know how it is worked out, you can check that the super on each pay looks right, and you can budget for it as a real cost of employing people. Getting the earnings or the rate wrong means paying the wrong amount of super, which can lead to problems later.

What you will learn¶

What the Super Guarantee is
What ordinary time earnings are
That the SG rate is set by law

Understanding the concept¶

The Super Guarantee has two parts: the earnings it is based on, and the rate applied to those earnings.

The earnings part is called ordinary time earnings, or OTE. The Australian Taxation Office (ATO) describes OTE as what you pay an employee for their ordinary hours of work. It includes things like commissions, shift loadings and some allowances, but it does not include overtime. So OTE is not always the same as the employee's total pay — overtime is generally left out when working out super.

The rate part is a percentage set by law, known as the SG rate. The employer pays that percentage of the employee's OTE as super. The SG rate is currently 12%, as confirmed by the ATO. Because the rate is set by law, it can change over time — always use the current rate when working out super.

Put the two parts together and you have the Super Guarantee: the SG rate applied to the employee's ordinary time earnings.

For accountants & bookkeepers

OTE is defined for super purposes and is usually the amount earned for ordinary hours of work, including commissions, shift loadings and some allowances, but not overtime. Salary and wages are similar to OTE but also include overtime, so the two figures can differ. The SG amount is the OTE multiplied by the current SG rate. A maximum contribution base can cap the earnings used for very high earners — the detail sits in the "how much super to pay" lesson.

Example¶

A retail assistant works ordinary hours plus some overtime in a pay period. The super is worked out on their ordinary time earnings — their pay for the ordinary hours, plus any commissions, shift loadings and qualifying allowances. The overtime is generally left out. The employer applies the current SG rate to that OTE figure to get the super amount, and pays it into the assistant's super fund.

Common mistakes¶

Working out super on total pay including overtime — super is based on OTE.
Using an old SG rate — the rate is set by law and can change, so use the current one.
Forgetting that some allowances and loadings count as OTE — leaving them out can understate the super owed.

How this works in myaccountant¶

In the app — when you run a pay run, myaccountant works out the Super Guarantee for each eligible employee on their ordinary time earnings, using the current SG rate. The super amount is shown per employee, so you can see it before you finalise the pay run.

Key points¶

The Super Guarantee is the compulsory minimum super for eligible employees.
It is worked out on ordinary time earnings (OTE), not total pay.
OTE generally excludes overtime.
The SG rate is set by law and is currently 12%.
Apply the current SG rate to OTE to get the super amount.

Learn next¶

General information only — not tax, super or financial advice.

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