What is superannuation?¶

Superannuation — usually shortened to super — is money set aside during a person's working life to support them in retirement. It is not part of the wage that lands in the employee's bank account. Instead, it is paid into a separate account called a super fund, where it stays and grows until the person retires.

If you employ people, super is an extra cost on top of their wages. For each eligible worker, you must pay an amount of super into their super fund. This lesson is the big-picture introduction to the whole Superannuation module.

In one line

Super is money set aside for an employee's retirement, held in a super fund — and employers must pay it for their eligible workers on top of their wages.

Why this matters¶

Super is one of the main duties that comes with employing people. It is separate from the wage and separate from the tax you send to the ATO. If you do not understand what super is, it is easy to think of it as part of the pay — but it is a payment you make to a fund on the worker's behalf. Getting this clear from the start makes the rest of payroll much easier to follow.

What you will learn¶

What superannuation is
Where super money is held
That employers must pay super for eligible workers

Understanding the concept¶

Super is a way of saving for retirement. The Australian Taxation Office (ATO) explains that your employer pays super for you so there is money set aside for when you stop working. Because it is meant for retirement, the money generally cannot be taken out until the person reaches a certain age or meets another condition.

The money is held in a super fund — a separate account run by a super provider, not by the employer and not by the worker. The fund looks after the money and invests it over time, so it can grow across the person's working life.

For an employer, super works like this. When you pay an eligible worker, you also pay an amount of super into their super fund. This is on top of their wage — it is not taken out of their pay. The compulsory minimum you must pay is called the Super Guarantee, which has its own lesson.

For accountants & bookkeepers

Super is governed by the ATO, not by Fair Work. The compulsory minimum is the Super Guarantee, worked out on an employee's ordinary time earnings (OTE) at the rate set by law. This module covers who is eligible, how the amount is worked out, and when it must be paid. Fund choice and stapled/default funds are covered in the Employees module rather than here.

Example¶

A small cafe hires a casual worker. Each pay, the owner pays the worker their wage for the hours they worked, and separately pays an amount of super into the worker's super fund. The wage goes to the worker's bank account. The super goes to the fund, where it stays until the worker retires. The worker sees both amounts on their payslip — the wage they take home, and the super paid on their behalf.

Common mistakes¶

Thinking super is taken out of the wage — it is paid on top of the wage.
Treating super as optional — for eligible workers it is compulsory.
Confusing super with the tax you send to the ATO — they are two separate payments.

How this works in myaccountant¶

In the app — when you run a pay run, myaccountant works out the super for each eligible employee based on their ordinary time earnings, and shows the super amount for each person. You can then pay that super to the employees' funds and see it reflected in your payroll records.

Key points¶

Super is money set aside for an employee's retirement.
It is held in a separate super fund, not by the employer or the worker.
Employers must pay super for eligible workers.
Super is paid on top of the wage, not taken out of it.
The compulsory minimum is called the Super Guarantee.

Learn next¶

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

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