Superannuation Guarantee Explained

The superannuation guarantee (SG) is the minimum amount of super your employer must pay on your behalf. The rate is 12% of your ordinary time earnings, where it has sat since 1 July 2025 — the final step of a legislated climb that began at 9% back in 2002-03.

Two things about the SG trip people up. First, it is calculated on ordinary time earnings (OTE), not on every dollar you are paid — the distinction matters if you work overtime. Second, it is paid by your employer on top of your wages, unless your contract quotes a package "including super", in which case the 12% is carved out of the headline number. Our superannuation calculator shows the employer contribution for any salary and lets you model extra contributions alongside it, and the salary package calculator untangles offers where super is bundled into the headline figure.

Eligibility is broad. There is no minimum monthly earnings threshold — the old $450-a-month rule was abolished in 2022 — so SG is payable from the first dollar of OTE. Employees of any age qualify, as do workers under 18 once they work more than 30 hours in a week. Contractors paid wholly or principally for their labour are treated as employees for SG purposes even if they quote an ABN, a point many gig-adjacent workers miss.

OTE is what you earn for your ordinary hours of work. In practice that includes:

• Base salary or wages for ordinary hours
• Most allowances (shift loading, casual loading, on-call allowances)
• Commissions and performance bonuses
• Annual leave, sick leave and long service leave taken while employed
• Back pay for ordinary hours

It generally excludes:

• Overtime worked outside your ordinary hours, where those hours are clearly identifiable
• Expense reimbursements (a tool allowance spent on tools, travel reimbursed at cost)
• Unused leave paid out on termination

The overtime carve-out is the one to watch. If your contract does not define ordinary hours — common for casuals with irregular rosters — the ATO's position is that all the hours you actually work may count as ordinary hours, and super is payable on all of them.

The table below shows the annual SG entitlement at six salary points for 2026-27, assuming the full salary is OTE. The last row shows where the maximum super contribution base caps the employer's obligation.

At $300,000, straight 12% would be $36,000 — but the employer is only obliged to pay SG on earnings up to the contribution base of $270,830, which works out to $32,499.60. It is no accident that this lands just under the $32,500 concessional cap: the base is set so that compulsory SG alone cannot breach the cap.

Employers do not have to pay SG on earnings above the maximum contribution base. From 1 July 2026 this became an annual figure of $270,830, replacing the old quarterly test, as part of the Payday Super reforms.

The switch from quarterly to annual matters for anyone with lumpy income. Under the old quarterly base, a large commission or bonus in a single quarter could exceed the quarterly ceiling and miss out on SG, even if annual earnings were well below the annualised base. With one annual figure, the timing of your income within the year no longer affects how much SG you accrue. Note the base caps the employer's obligation, not their generosity — many employers above the base pay 12% on the full salary anyway, so check your contract.

Since 1 July 2026, SG is due every payday and must land in your fund within seven business days of the day you are paid. The old rules allowed employers to hold contributions back and pay quarterly, up to 28 days after quarter end — meaning super for a July payday could legally arrive in late October.

This makes checking your fund far simpler: log in a fortnight after any payday and the matching contribution should be visible. If it is not, that is now a compliance problem for your employer, not a quirk of timing. The ATO's unpaid super process lets you report shortfalls, and our guide on what to do when your employer is not paying super walks through the evidence worth gathering first.

SG contributions are concessional (before-tax) contributions. Inside the fund they are taxed at 15% rather than at your marginal income tax rate — for most workers a substantially better deal than taking the same dollars as salary.

Two caps frame what can go in during 2026-27:

• Concessional cap: $32,500. This covers employer SG plus any salary-sacrifice or personal deductible contributions. Amounts over the cap are effectively taxed at your marginal rate, though unused cap from the previous five years can be carried forward if your total super balance is under $500,000.
• Non-concessional cap: $130,000. This covers after-tax money you contribute yourself, with no contributions tax on the way in.

On a $100,000 salary, SG uses $12,000 of the concessional cap, leaving $20,500 of headroom for salary sacrifice before the cap becomes a constraint.

The 15% contributions tax also explains why the guarantee is such a large slice of most people's retirement plan: a worker in the 30% bracket keeps 85 cents of every super dollar versus 68 cents of every salary dollar after the Medicare levy, before any investment earnings compound on top.