This guide outlines best practices for managing Superannuation Guarantee Contributions (SGC) for employees under 18 years old.
ATO Guidance on Superannuation for Employees Under 18
- The ATO requires to pay superannuation for employeees under 18 only if they work more than 30 hours in a week, regardless of their earnings.
- Important: According to Superannuation Guarantee Determination SGD 93/1, the calculation is based on the actual hours worked in a week, not averaged across pay periods (fortnightly or monthly).
For more details, refer to the ATO website.
Xero System Limitation
- Xero does not automatically factor in an employee's age or hours worked to determine when to calculate superannuation. This will need to be done manually for employees under the age of 18 years.
- If a Superannuation line is added to an employee's Pay Template, Xero will calculate super regardless of the employee's age or hours worked.
Recommendation:
- Remove the superannuation line from Pay Templates for employees under 18.
- Manually add superannuation contributions during the pay run only if the employee works 30 hours or more in a week.
How to Remove Superannuation from an Employee's Pay Template
- Navigate to Payroll > Employees
- Select the employee.
- Go to the Pay Template tab.
- Click the 'x' on the superannuation line.
- Click Save.
Tracking Employee Age
Use the Employee Contact Details Report to monitor employees' ages and ensure compliance.
- Navigate to Accounting > Reports.
- Select Employee Contact Details Report.
- Apply desired filters and click Update.
Note: The reported age is based on the DOB entered on their employee record.
Reviewing Superannuation Contributions
To identify contributions for employees under 18:
- Superannuation Accruals Report:
- Navigate to Accounting > Reports > Superannuation Accruals.
- Apply desired filters and click Update.
- Review contributions by type, amount, and payment status (e.g., "paid" or blank, if payment has not been made).
- Payroll Activity Details Report:
- Navigate to Accounting > Reports > Payroll Activity Details.
- Apply desired filters and click Update.
- Review the hours worked per pay period.
Superannuation Accruals Report
Payroll Activity Details Report
Adjusting Overstated Super Contributions
If superannuation contributions were overstated.
- Process an unscheduled pay run to adjust the contributions. Refer to Xero's guide for instructions.
- Alternatively, if you have already paid the super contributions to the clear house:
- Wait until the employee accrues enough super to offset the overpayment; or
- Contact the super fund to request a refund.