The super guarantee rate increased to 12% on 1 July 2025 — the final step in a legislated schedule that has been running since 2021. For Australian employers, this means higher super obligations on every dollar of ordinary time earnings paid to eligible employees. For business owners who haven’t updated their payroll, it means a compliance gap that can quickly compound into penalties.
This guide explains the super guarantee rate for 2025–26, what earnings it applies to, who qualifies as an employee for SG purposes, and what the consequences of underpayment look like under Australia’s super guarantee charge regime.
What Is the Super Guarantee Rate for 2025–26?
The super guarantee (SG) rate for the 2025–26 financial year is 12%. This applies to ordinary time earnings (OTE) paid to eligible employees from 1 July 2025 onwards.
This is the final rate under the legislated schedule introduced in the Treasury Laws Amendment (Your Future, Your Super) Act 2021. No further increases to the rate are legislated after 2025.
| Financial Year | SG Rate |
|---|---|
| 2021–22 | 10.0% |
| 2022–23 | 10.5% |
| 2023–24 | 11.0% |
| 2024–25 | 11.5% |
| 2025–26 | 12.0% |
What Does Ordinary Time Earnings Mean?
Super guarantee is calculated on ordinary time earnings — not total earnings. OTE includes your regular pay for ordinary hours of work, including paid leave, commissions, allowances, and bonuses that are paid regularly.
OTE does not include:
- Overtime pay (for hours worked beyond the ordinary work pattern)
- Expense reimbursements
- Certain fringe benefits
- Payments that are genuine compensation rather than wages
The distinction between OTE and overtime matters because many employers incorrectly calculate super on total gross pay inclusive of overtime, or alternatively exclude certain allowances they should include. Either error creates a compliance issue.
Who Must Receive Super Guarantee?
Super guarantee obligations apply to all employees aged 18 and over, regardless of how many hours they work. Since 1 July 2022, the $450 per month minimum earnings threshold was removed — meaning employees earning any amount are eligible from day one.
Employees under 18 are entitled to super if they work more than 30 hours per week.
Super also applies to some contractors. If a contractor is engaged wholly or principally for their labour — even if they hold an ABN — they may be classified as an employee for super purposes. This is one of the most common compliance traps for small business owners. See our detailed guide on super obligations for contractors and subcontractors for a full breakdown. Note also that contractors who earn most of their income from their own skills may also be subject to the personal services income (PSI) rules, which have additional implications for how their income is taxed.
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Book a Consultation →When Must Super Be Paid?
Super contributions must be received by the employee’s chosen fund by the quarterly SG due dates:
- Q1 (Jul–Sep): 28 October
- Q2 (Oct–Dec): 28 January
- Q3 (Jan–Mar): 28 April
- Q4 (Apr–Jun): 28 July
Importantly, the obligation is for the contribution to be received by the fund — not merely processed by you. Super clearing house delays, banking lead times, and public holidays can all cause payments to arrive after the due date even when lodged in good faith. Many employers allow insufficient buffer time.
Looking ahead, the Federal Government has legislated payday super, which will require super to be paid within seven days of each pay cycle from 1 July 2026. This will fundamentally change payroll processes for most businesses. Our guide on payday super changes for 2026 explains what to prepare for now.
What Happens If You Don’t Pay on Time?
Missing the quarterly due date triggers the super guarantee charge (SGC). The SGC is not merely interest on late payment — it is a punitive regime that is significantly more expensive than the original super obligation.
Under the SGC, you must lodge a super guarantee charge statement with the ATO and pay:
- The shortfall amount (calculated on salary and wages, not just OTE — a broader base)
- Nominal interest of 10% per annum on the shortfall from the start of the relevant quarter
- An administration charge of $20 per employee per quarter
The SGC is also not tax-deductible. Regular employer super contributions paid on time are deductible — the SGC is not. This creates a substantial effective cost difference between on-time and late payment.
See our detailed guide on the super guarantee charge for a full breakdown of how it’s calculated and how to manage an SGC situation if you’re already in arrears.
Super and the Maximum Contributions Base
You are not required to pay super on earnings above the maximum super contributions base. For 2025–26, this is $65,070 per quarter (up from $62,270 in 2024–25). If an employee earns more than this per quarter, your SG obligation is capped at 12% of $65,070 — regardless of their actual earnings above that threshold.
For high-income employees on salaries of $260,000 or more per year, this cap is material and can meaningfully reduce your payroll super costs relative to what 12% of full salary would produce.
Super for Company Directors
Directors who receive director’s fees are entitled to super guarantee on those payments. If you are a working director who receives salary and wages, you must receive super on your ordinary time earnings — even if you are the sole director and sole shareholder of the company.
Many small business owners structure their remuneration primarily as dividends rather than salary to minimise payroll costs including super. While this is a legitimate structuring choice, it must be done deliberately and correctly — and it interacts with a range of other tax rules. Seek advice before restructuring director remuneration.
Super Guarantee and Salary Sacrifice
If your employees make salary sacrifice contributions into super, be careful about how this interacts with your SG obligation. Since 1 January 2020, salary sacrifice contributions cannot reduce the SG base amount — employers must pay super on the pre-sacrifice wage.
This means if an employee earns $80,000 and salary sacrifices $10,000 to super, your SG obligation is still calculated on the full $80,000 — not the $70,000 take-home equivalent. Some payroll software handles this incorrectly.
Practical Compliance Checklist for 2025–26
- Confirm your payroll software is calculating SG at 12% from 1 July 2025
- Review which workers are classified as employees vs contractors — the SG test is broader than the common law employment test
- Confirm that super is being paid on ordinary time earnings, not total gross pay inclusive of overtime
- Build in lead time before quarterly due dates to account for clearing house and banking delays
- Review your salary sacrifice arrangements to confirm super is calculated on pre-sacrifice wages
- Start planning for payday super from 1 July 2026 — the operational change is significant
Frequently Asked Questions
Is the 12% super rate going up further after 2025–26?
No. The legislated schedule ends at 12%. There is no currently legislated increase beyond 12%, though future governments could legislate further changes. For planning purposes, 12% is the current permanent rate.
Do I have to pay super for casual employees?
Yes. Casual employees are entitled to super guarantee. The only exemption for under-18 employees — who must work more than 30 hours per week — applies equally to casual workers. There is no minimum hours threshold for employees 18 and over.
Can I count salary sacrifice contributions toward my SG obligation?
No. Since January 2020, salary sacrifice contributions cannot reduce your SG obligation. You must pay SG calculated on the pre-sacrifice wage, in addition to any salary sacrifice amounts the employee contributes.
What if I can’t afford to pay super on time?
If you genuinely cannot pay, contact the ATO proactively. Voluntary disclosure before an ATO audit significantly reduces penalties. You should still lodge the SGC statement even if you can’t pay the full amount — the failure to lodge compounds the issue. Speak with a tax adviser immediately if you are facing SG arrears.
Frequently Asked Questions
What is the super guarantee rate for 2025-26?
The super guarantee rate is 12% of ordinary time earnings for the 2025-26 year. This is the final step in the legislated increases, having risen from 11.5% in 2024-25. Employers must apply 12% to eligible employees’ ordinary time earnings.
When did super guarantee reach 12%?
The super guarantee rate reached its final legislated level of 12% on 1 July 2025, the start of the 2025-26 year. It had increased gradually over several years from 9.5%, with 11.5% applying during 2024-25.
What earnings does super guarantee apply to?
Super guarantee is calculated on ordinary time earnings, which broadly means what employees earn for their ordinary hours, including many allowances and some bonuses, but generally excluding overtime. Getting this base right is essential to avoid a shortfall.
What happens if I pay super at the wrong rate?
If you underpay super by using the wrong rate you create a shortfall and must lodge a Super Guarantee Charge statement and pay the SGC, which is not deductible. Always confirm your payroll applies the correct 12% rate for 2025-26.
This article contains general advice only and does not take into account your specific circumstances. Please speak with a qualified accountant or tax adviser before making financial decisions.
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