You must make super contributions for an employee if you’re considered an employer for super guarantee purposes and your employee is entitled to the super guarantee.
You also have to pay super for contractors if the contract is wholly or principally for their labour, and for employees who are temporary residents of Australia.
If you’re a sole trader or partner in a partnership you don’t have to pay super for yourself, but you can make super contributions as a way of saving for your retirement.
You must pay contributions into a complying super fund or retirement savings account (RSA) and pass on your employee’s tax file number (TFN) to their super fund where you are required to do so. Your eligible employees may be entitled to choose their super fund – if so, you must provide them with a form enabling them to make their choice.
How much to pay and when to pay
Currently, you must pay a minimum of 9.25% of each eligible employee’s ordinary time earnings each quarter in super. From 1 July 2014, the super guarantee rate will increase to 9.50%.
The Government has announced the rate will remain at 9.5% until 30 June 2018 and then increase by 0.5 percentage points each year until it reaches 12%.