Australia's Super Guarantee explained: OTE, fund choice, stapled funds, and the SGC penalty

The Superannuation Guarantee (SG) is Australia's mandatory employer-funded retirement savings system. Employers contribute a percentage of each eligible employee's ordinary time earnings to a complying superannuation fund quarterly. Two features consistently catch international operators: the contribution base (ordinary time earnings, not gross salary) and the penalty for late or incorrect payment (the Super Guarantee Charge — explicitly non-deductible for corporate tax, making late super materially more expensive than on-time compliance).

The SG Rate

12% of ordinary time earnings (OTE) from 1 July 2025, the legislated endpoint of a decade-long phased increase. Employer-only — no mandatory employee contribution.

Verify the rate for the current financial year via the ATO.

Who Is Eligible

All employees aged 18 and above, regardless of hours worked or earnings level. Employees under 18 who work more than 30 hours per week. No minimum earnings threshold applies.

Ordinary Time Earnings (OTE) — The Contribution Base

OTE is earnings for ordinary hours of work — not total gross salary.

Included in OTE

• Base salary and wages
• Over-award payments for ordinary hours
• Shift loadings for ordinary shifts
• Commission and piece-rate payments for ordinary hours
• Casual loadings
• Ordinary-hour allowances (first-aid, tool, etc.)

Excluded from OTE

• Overtime payments — the most significant exclusion
• Unused leave paid out on termination
• Expense reimbursements
• One-off payments not directly linked to ordinary hours

The OTE/overtime distinction is the most common source of SG calculation errors. Verify ATO guidance for specific payment types before classifying variable pay components.

Fund Choice and Stapled Funds

Employee choice of fund

Employees choose their own complying super fund. Employers must accept the chosen fund and direct contributions there.

The stapled fund obligation (from 1 November 2021)

For new employees who do not choose a fund, the employer must:

1. Query the ATO via ATO Online Services for Business for the employee's "stapled super fund" (an existing account the employee already holds).
2. If a stapled fund exists, direct contributions there — not to the company default fund.
3. If no stapled fund exists, use the employer's nominated default fund.

The query uses the employee's TFN and date of birth. It must be completed before the first super contribution.

SuperStream — The Payment Standard

All SG contributions must be paid via SuperStream — the ATO's standardised electronic data and payment system. Contributions paid without SuperStream-compliant data are treated as if they were never paid, and the SGC applies even if the money reached the fund.

Use SuperStream-enabled payroll software, an SMSF messaging provider, or the ATO's Small Business Superannuation Clearing House (SBSCH) for employers with fewer than 20 employees.

Quarterly Payment Deadlines

Quarter	Period	Deadline
Q1	1 July to 30 September	28 October
Q2	1 October to 31 December	28 January
Q3	1 January to 31 March	28 April
Q4	1 April to 30 June	28 July

The deadline is when the fund receives the contribution — not when the employer initiates it. Allow 1 to 3 business days for SuperStream processing.

The Super Guarantee Charge (SGC) — Why Late Super Is Expensive

When super is not paid in full, on time, to the correct fund via SuperStream, the employer owes the SGC. It is more expensive than the SG in three ways:

1. Broader base: SGC is calculated on total salary and wages — not just OTE. The SGC base is larger than the SG base for employees with overtime or non-OTE payments.

2. Additional charges: SGC includes the shortfall amount + 10% per annum nominal interest + AUD 20 per employee per quarter administration fee.

3. Not tax-deductible: Regular SG contributions are tax-deductible. The SGC is not. At Australia's 30% corporate tax rate, a deductible AUD 1,000 SG contribution costs AUD 700 after tax. A non-deductible AUD 1,000 SGC costs AUD 1,000 — a 43% higher effective cost.

When the SGC applies, an SGC Statement must be lodged with the ATO within one month of the quarterly deadline. Failure to lodge carries separate penalties.

Common Mistakes

1. Including overtime in OTE. The most common super calculation error. Overtime is excluded from OTE — it is not part of the SG base.

2. Not querying the stapled fund for new employees. Defaulting to the company fund without checking for a stapled fund is non-compliant from November 2021. The ATO query is a required step.

3. Missing the quarterly deadline by a day. The fund must receive the contribution by the 28th. SuperStream transfers take 1 to 3 business days — initiate payment early enough to allow for processing.

4. Paying super outside SuperStream. A direct bank transfer without SuperStream-compliant data is treated as if the contribution was never made. The SGC applies regardless.

5. Treating the SGC as a minor late fee. The non-deductibility makes the SGC approximately 43% more expensive than an on-time contribution at Australia's corporate tax rate. This is not a minor administrative penalty.

How Cadana Supports Australian Payroll Compliance

Identifying OTE correctly per payment type, querying stapled funds for new employees via the ATO API, routing contributions via SuperStream to the correct fund, managing quarterly SG deadlines, and generating STP Phase 2 reports with superannuation liability data — Cadana's global payroll tax engine handles the full Australian super compliance cycle at the API layer.

Book a demo at cadanapay.com/book-demo to see how it works in practice.

Sources and References

• Australian Taxation Office — Super Guarantee employer guide
• ATO — Ordinary time earnings definition
• ATO — Stapled super fund obligations
• ATO — Super Guarantee Charge
• ATO — SuperStream employer guide
• Superannuation Guarantee (Administration) Act 1992

Rates current as of April 2026. Verify the SG rate for the current financial year and any OTE classification changes via ATO guidance.