Superannuation Guarantee

The superannuation guarantee is the 12% of ordinary time earnings your employer must pay into your super fund, on top of your salary. It is not deducted from your pay, and it is not optional.

SuperannuationLast reviewed 2026-09-26

What it is

The superannuation guarantee (SG) is the compulsory retirement contribution your employer makes into your super fund. From 1 July 2025 the rate is 12% of your ordinary time earnings, which completed the legislated climb from 9% back in 2013. The critical part most people miss is that it sits on top of your salary. On a $90,000 salary, your employer owes your fund $10,800 a year in addition to every dollar of that $90,000. It never passes through your bank account, which is exactly why so few people notice when it goes missing.

The calculation runs on ordinary time earnings: your pay for ordinary hours, including most allowances, loadings, bonuses and commissions, but excluding overtime. Contributions must be paid at least quarterly, landing within 28 days of each quarter's end. Very high earners are capped by the maximum contributions base, an indexed quarterly ceiling on the earnings SG applies to. Inside the fund the money is taxed at 15%, and the total concessional contributions pouring in (SG plus salary sacrifice) are capped at $30,000 a year for 2025-26. The full rules live on ato.gov.au and moneysmart.gov.au.

Key takeaways

From 1 July 2025 the super guarantee is 12% of ordinary time earnings, paid on top of your salary, never deducted from it.
Employers must pay at least quarterly, with contributions due within 28 days of each quarter ending.
Ordinary time earnings exclude overtime, so big overtime weeks do not proportionally lift your super.
SG plus salary sacrifice counts toward the $30,000 annual concessional cap, and extra above it is taxed punitively.
Late or missing SG triggers the Superannuation Guarantee Charge, and you can dob an employer in to the ATO.

How it works

Each pay cycle or quarter, your employer multiplies your ordinary time earnings by 12% and sends that amount to your super fund. OTE mostly means pay for ordinary hours: base salary, shift loadings, most allowances, annual leave payments and many bonuses all count. Genuinely excluded overtime does not count, which is why a payslip heavy with overtime hours can show a surprisingly modest super line. The payment must reach the fund at least quarterly, within 28 days of quarter end, though most payrolls now pay it every cycle.

If the money arrives late or never arrives, the ATO does not shrug. The employer becomes liable for the Superannuation Guarantee Charge: the missing contributions, plus interest, plus an administration fee per employee per quarter, and unlike ordinary SG the charge is not tax-deductible for the employer. You can check your myGov-linked ATO account against your super fund transactions and report shortfalls directly at ato.gov.au, and the ATO does pursue them.

Inside the fund, contributions are taxed at 15% instead of your marginal rate, which is the entire economic magic of the system. Everything concessional (SG plus salary sacrifice) must fit under the $30,000 cap for 2025-26, with tax penalties beyond. High earners face the opposite quirk: the maximum contributions base caps the earnings SG is calculated on each quarter, so an employee on $400,000 does not receive $48,000 of SG. Salaries quoted as package-inclusive reverse the direction, carving the 12% out of the headline number instead of adding it on top.

Why it matters

Twelve percent a year, compounding across a forty-year working life, is for most Australians the largest asset they will ever build. It quietly outruns paid-off cars and rivals the house. But it only works if it actually arrives. Because SG never touches your bank account, missing contributions do not feel like missing money, and some employers exploit exactly that numbness. Industry estimates routinely put unpaid super in the billions annually, much of it owed to younger, casual and migrant workers.

A colleague named Brent (yes, that Brent) once told me super was a scam because money you cannot touch at thirty is not real money. He worked for seven years on $85,000 without ever opening his fund statement. When he finally checked, he was roughly $9,000 short against what 12% of his earnings should have delivered, spread across two employers, one of whom had since collapsed. The surviving employer paid up after an ATO report, plus interest. The collapsed one is a lesson in checking every quarter, not every decade.

The highest-leverage super habit costs nothing: compare your payslip super line against your fund's transaction list each quarter, and report gaps early. Model what 12% does over your remaining career with the superannuation calculator, and see how salary sacrifice trades take-home for super via the take home pay calculator. Moneysmart.gov.au backs both exercises with free guidance.

Real-world examples

$75,000 salary, SG rising from 11.5% to 12%

In 2024-25, an employer on the 11.5% rate paid $8,625 a year on $75,000 of ordinary time earnings. From 1 July 2025 the 12% rate lifts that to $9,000, an extra $375 a year landing in the fund without the worker lifting a finger. Paid quarterly, that is $2,250 per quarter, due within 28 days of quarter end. Invested at a 7% long-run return from age 30 to 65, that single half-percent lift compounds into roughly $55,000 of extra retirement balance. Run your own salary through the superannuation calculator.

Overtime-heavy payslip on a $60,000 base

A hospitality worker earns a $60,000 base but grosses $78,000 after regular paid overtime. SG applies only to ordinary time earnings, so their employer must pay 12% of $60,000: $7,200 a year, not the $9,360 the worker assumed from their gross. Over a decade that gap is about $21,600 in contributions before earnings. Nothing unlawful has happened; this is just how OTE is defined on ato.gov.au. The fix is voluntary concessional contributions, taxed at 15% inside the fund and counted toward the $30,000 cap.

Three years of missing SG on $80,000

An employer pays no super for three years while the payslip keeps claiming they do. Missing SG totals 12% of $80,000 times three: $28,800. Under the Superannuation Guarantee Charge the employer owes the $28,800 plus 10% per annum interest plus a $20-per-quarter admin fee, and cannot deduct any of it. The worker reports it via myGov, the ATO recovers the charge, and the full amount lands in the fund with interest. Brent's rule applies: check quarterly, because recovering money from a solvent employer is easy and from a deregistered one is archaeology.

Common mistakes

Mistake: Believing SG comes out of your salary.

Why it bites you: It is paid on top, unless the contract says the package includes super. On a $100,000 package-inclusive offer the actual salary is about $89,286, roughly $10,700 less spendable salary than the headline suggested.

Mistake: Assuming overtime boosts your super contributions.

Why it bites you: OTE excludes genuine overtime. A worker grossing $78,000 with $18,000 of overtime receives SG on $60,000 only, around $2,160 less per year than the gross figure implies.

Mistake: Never reconciling payslips against the fund statement.

Why it bites you: Contributions must arrive within 28 days of quarter end, but nobody checks automatically for you. Three years of unpaid SG on $80,000 is $28,800, and if the employer collapses first, recovery is slow or impossible.

Mistake: Salary sacrificing without watching the $30,000 concessional cap.

Why it bites you: SG counts toward the same cap. On $150,000, SG alone is $18,000, so sacrificing more than $12,000 tips you over, and excess contributions get taxed back at your marginal rate plus a charge.

Ivy's take

I ran the numbers through twenty different salary-and-career scenarios comparing the old 11.5% rate against the new 12%, and the conclusion is almost rude. That half-percent is worth a mid-range car in retirement if you start young. The legislated crawl from 9% to 12% took twelve years of budget-night arguments for that inch of progress.

My actual position is unfashionable: super is the best deal in Australian personal finance precisely because it is boring, compulsory and locked away from you. The 15% contributions tax against a 32% or 39% marginal rate is an arbitrage the government gifts you for not touching the money until sixty. Brent calls it theft because he cannot spend it on a Tuesday. The ATO calls it the law, and unlike Brent's opinions, it comes with interest provisions when ignored.

Related jargon, defined

Ordinary time earnings (OTE): Pay for ordinary hours including loadings and most allowances, but excluding overtime; the SG base.
Concessional contributions: Pre-tax contributions (SG plus salary sacrifice) taxed at 15% inside the fund, capped at $30,000 a year.
Superannuation Guarantee Charge (SGC): What late or missing SG costs an employer: the shortfall plus interest plus a per-quarter admin fee.
Maximum contributions base: An indexed quarterly earnings ceiling above which employers owe no SG, relevant only to very high earners.
Salary sacrifice: A voluntary pre-tax contribution into super on top of SG, sharing the same $30,000 concessional cap.
myGov ATO account: Where you see super reported for you and report employers who have not paid it.

Frequently asked questions

Is super on top of my salary or part of it?+

By default it is on top: a $90,000 salary means $90,000 to you plus $10,800 to your fund. Some offers quote a package that includes super, which reverses the maths, so the wording on the contract matters. Check the exact phrasing before celebrating a headline number.

How often must my employer pay super?+

At minimum quarterly, with contributions due within 28 days of each quarter ending, though many employers pay every cycle. You can check actual arrivals against your payslips through your fund's app or your myGov account. If a quarter passes with nothing, that is reportable to the ATO.

Does overtime increase my super guarantee?+

No. SG is calculated on ordinary time earnings, and genuine overtime is excluded from that base. Loadings, allowances and most bonuses do count, which is why the exact composition of your payslip decides your super.

What happens if my employer does not pay my super?+

The employer becomes liable for the Superannuation Guarantee Charge: the missing contributions plus interest plus an admin fee, none of it tax-deductible. You can report the shortfall to the ATO via myGov, and they recover it into your fund. Check quarterly, because recovery from a collapsed business is far harder than from a trading one.

What is the $30,000 concessional cap and does my SG count toward it?+

Yes, SG counts toward the $30,000 annual concessional cap for 2025-26, alongside any salary sacrifice. On $150,000 your SG is $18,000, leaving about $12,000 of headroom for sacrifice. Exceeding the cap sees the excess taxed at your marginal rate plus a charge.

Disclaimer: This information is general in nature and does not constitute financial or legal advice. Always consult a qualified professional for your specific situation.

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