Superannuation guarantee (SG)
The compulsory super employers pay on top of wages.
The superannuation guarantee is the minimum super an employer must pay into your fund on top of your wages — 12% of ordinary earnings in Australia. It’s your money for retirement, held in a super fund. If you’re a sole trader you’re not obliged to pay yourself super, but you can, and it can be tax-effective.
The guarantee is paid on top of your wage, not out of it — a job advertised at $90,000 plus super means $90,000 in your pay and the guarantee on top. It counts towards your annual concessional contributions cap, so if you are also salary sacrificing, both together have to fit under the limit.
Worked example
On $90,000 of ordinary earnings the guarantee is 12%, so $10,800 goes into your fund for the year. Inside super it is taxed at 15% rather than your marginal rate, leaving $9,180 invested.
Common mistake
Reading “$90,000 including super” as the same offer as “$90,000 plus super”. In the first, the guarantee comes out of the figure and your actual wage is lower — worth clarifying before you accept, because the gap is thousands.
Grounded in ATO guidance. Figures last checked . General information, not tax advice.
Questions about this term
Superannuation guarantee (SG): common questions
- Is the super guarantee paid out of my wage or on top of it?
- On top. A job advertised at $90,000 plus super means $90,000 in your pay and the 12% guarantee — $10,800 — paid into your fund as well. The exception is an offer worded “including super”, where the guarantee comes out of the figure and your actual wage is lower, so it is worth clarifying before you accept because the gap is thousands.
- Do I have to pay myself super as a sole trader?
- No — a sole trader is not obliged to pay their own super. You can choose to, and it can be tax-effective, because contributions inside super are taxed at 15% rather than your marginal rate. The guarantee itself is an obligation on employers paying wages, not on you paying yourself.
- How much of the super guarantee actually ends up invested?
- Slightly less than the headline figure, because super is taxed on the way in. On $90,000 of ordinary earnings the 12% guarantee is $10,800; taxed at 15% inside the fund, $9,180 is left invested. That 15% is usually well under the marginal rate the same money would face as wages, which is what makes the guarantee tax-effective.
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