Module 2: Working out if you have to pay super

Who is eligible for super guarantee

There is no minimum amount an employee must earn before they are entitled to super guarantee (SG) contributions.

This includes independent contractors who are eligible for super, even if they quote an Australian business number (ABN), see Independent contractors.

You must pay SG for eligible employees, even if the employee:

• works full time, part time or on a casual basis
• receives a super pension or annuity while they're still working – including those who qualify for the transition-to-retirement measure
• is a temporary resident – when the employee leaves Australia, they can claim the super contributions you made through the Departing Australia Superannuation Payment
• works overseas (see Employees working overseas)
• is a company director
• is a family member working in your business.

You don't have to pay SG for individuals for whom the Commissioner has issued an SG employer shortfall exemption certificate. Employees that earn enough income to exceed the concessional contribution cap from 2 or more employers qualify for the exemption certificate.

Employees under 18

From 1 July 2022, you must pay SG on payments you make to these employees if they work for you more than 30 hours in a week. This is regardless of how much they get paid.

Prior to 1 July 2022, you paid SG for an employee under 18 years old if:

• they worked for you more than 30 hours in a week
• you paid them $450 or more (before tax) in salary or wages in a calendar month.

Independent contractors

In certain circumstances you must pay super for independent contractors who are deemed to be employees for superannuation purposes.

You must make SG contributions for these individuals in the following circumstances:

• The worker works under a contract that is wholly or principally for their labour
• A sportsperson, artist or entertainer paid to perform, present or participate in any music, play, dance, entertainment, sport, display or promotional activity, or similar activity
• A person is paid to provide services in connection with any performance, presentation or participation in these activities
• A person is paid to perform services related to the making of a film, tape, disc, television or radio broadcast.

If you enter into a contract with someone other than the person who'll actually provide the labour – for example, with a company, trust or a partnership – you don't pay super to the person providing the labour.

Domestic workers

If you engage someone to do work of a domestic or private nature, you have to pay SG for them as follows:

• From 1 July 2022
  • they work for you more than 30 hours in a week, regardless of how much you pay them.
• Prior to 1 July 2022
  • they work for you more than 30 hours in a week, and
  • you paid them $450 or more (before tax) in salary or wages in a calendar month.

'Domestic or private' means work either:

• relating personally to you (not to a business of yours)
• relating to your home, household affairs or family – such as work by a nanny, housekeeper or carer.

If you use funds from the National Disability Insurance Scheme (NDIS) to engage a carer or other domestic help, you may have to pay SG for these workers. This applies to people who choose to manage their NDIS plan themselves and employ workers who meet the eligibility criteria for the SG outlined above.

Employees working overseas

If you send an Australian employee to work temporarily in another country, you must continue to pay SG contributions for them in Australia.

The other country may require you or your employee to pay super (or equivalent) there as well. However, Australia has bilateral agreements with some countries so that you don't have to pay it in both countries. This is as long as you continue to pay compulsory super contributions for the employee in Australia.

To gain exemption from the super payment in the other country if a bilateral agreement exists, you need to show the authorities in the other country a certificate of coverage. You get this certificate from the ATO.

To get a certificate of coverage, you can either:

• apply online (see Apply for a certificate of coverage)
• phone us on 13 10 20.

If you're self-employed

If you're self-employed, that is, a sole trader or a partner in a partnership, you can choose whether to contribute super for yourself. However, you may want to make personal contributions to a super fund as a way of saving for your retirement.

How to check if your employees are eligible

The easiest way to check if someone is eligible for super guarantee is to use the Super guarantee eligibility tool. Take a few minutes to explore the tool below.

Superannuation guarantee eligibility decision tool

Check your understanding

Use the following example and questions to test your understanding of this module.

Answers

Question 1: A is correct. Lily has worked works over 30 hours in one week in her job with the hardware store. Lily won't be entitled to super guarantee for any weeks she works less than 30 hours for the hardware store.

Question 2: B is correct. As Lily does not work 30 hours in a week in her job as a barista, she won’t be entitled to super guarantee for this work.

Summary of Module 2

Remember, when working out if you have to pay super for your employees:

• Identify employees who are eligible for super
• Use the Super guarantee eligibility tool
• From 1 July 2022, for employees under 18 years old, you must pay super guarantee if they work more than 30 hours in a week
• You need to pay super guarantee for some independent contractors. If you engage an independent contractor under a contract which is wholly or principally for their labour. This is the case even if they quote an ABN
• You generally need to pay super guarantee if your employee is a private or domestic worker and works more than 30 hours per week regardless of how much you pay them.

Return to Module 1: Overview of superannuation.

Continue to Module 3: Setting up super for your employees.