Superannuation is calculated by multiplying your ordinary time earnings by the current super guarantee rate of 12%, which applies for the 2025–26 financial year.1Australian Taxation Office. Super Guarantee Your employer pays that gross amount to your fund, which then takes 15% in contributions tax plus its own administration and investment fees before the remainder is invested. The difference between the figure on your payslip and the figure in your account trips most people up, so each layer of the sum is worth understanding on its own.
The 12% Super Guarantee Rate
The super guarantee rate is the percentage of your earnings your employer must contribute. After years of scheduled 0.5% rises each July, the rate reached its legislated ceiling of 12% on 1 July 2025 and continues at that level into 2026–27 and beyond.1Australian Taxation Office. Super Guarantee No further increases are legislated.
The 12% rate is a floor. Some employers pay above it, particularly in the public sector and some senior roles. Check how your contract treats super: if the figure is bundled into a total remuneration package rather than paid on top, the SG amount effectively comes out of your take-home pay instead of adding to it.
What Counts as Ordinary Time Earnings
The 12% applies to your ordinary time earnings (OTE), not your total gross pay. OTE is what you earn for your regular hours of work.2Australian Taxation Office. List of Payments That Are Ordinary Time Earnings If you work a lot of overtime, the gap between OTE and your total pay can be substantial.
Payments that count as OTE include:
- Base salary or wages for your standard hours
- Shift loadings and penalty rates, including public holiday rates
- Commissions, whether flat-rate or performance-based
- Paid leave: annual leave, sick leave, and long service leave
- Allowances that relate to your ordinary hours of work
The main exclusion is overtime, provided your ordinary hours are clearly identified in your award or agreement.2Australian Taxation Office. List of Payments That Are Ordinary Time Earnings If your employer’s records don’t properly separate ordinary hours from overtime, the ATO can treat all hours as ordinary, meaning super applies to the lot. Expense reimbursements and workers’ compensation payments are also outside OTE, because they aren’t pay for work performed.
Since 1 July 2022 there is no minimum earnings threshold. Even small casual earnings now attract super. Workers under 18 are the exception: they qualify only if they work more than 30 hours in a week.
The Quarterly Maximum Contribution Base
There is a ceiling on the earnings an employer has to use when working out SG. For 2025–26, the maximum contribution base is $62,500 per quarter.1Australian Taxation Office. Super Guarantee If you earn more than that in a quarter, your employer only has to calculate 12% on the first $62,500, capping the compulsory SG at $7,500 for that quarter. Above the cap, additional super is a matter of negotiation. The cap is adjusted each financial year in line with average weekly ordinary time earnings.
Working Out the Contribution: A Worked Example
Once you know your OTE and the cap, the arithmetic for a single quarter is simple:
- Add up your OTE for the quarter, leaving out overtime, reimbursements, and other excluded payments.
- Compare that total to $62,500. If your OTE is higher, use $62,500 instead.
- Multiply by 12%. That is the gross SG contribution.
If your OTE for the quarter is $25,000, the gross SG contribution is $25,000 × 0.12 = $3,000. If your OTE is $80,000 for the quarter, the calculation uses the cap: $62,500 × 0.12 = $7,500. In both cases the figure that actually reaches your account is lower, because tax and fees come off next.
The 15% Contributions Tax
Employer SG payments are concessional (before-tax) contributions, and your fund withholds a flat 15% as contributions tax before investing the rest.3Australian Taxation Office. Understanding Concessional and Non-Concessional Contributions On a $3,000 gross contribution, $450 goes to tax and $2,550 is invested. For most people, 15% is well below their marginal income tax rate, which is the central tax advantage of super.
The same 15% applies to salary sacrifice amounts and to personal contributions you claim a tax deduction for. It does not apply to after-tax contributions, because that money has already been taxed at your marginal rate.
Division 293 Tax for High Earners
If your combined income and concessional contributions are above $250,000, an additional 15% applies to the contributions sitting above the threshold, bringing the effective rate on them to 30%.4Australian Taxation Office. Division 293 Tax The income figure here takes in taxable income, reportable fringe benefits, and net investment losses. The ATO issues a separate Division 293 assessment, and you can elect to pay it from your super fund or from your own pocket.
Fund Fees and Insurance
After contributions tax, your fund takes its own cut. Administration fees typically appear as a flat monthly dollar amount, a small percentage of your balance, or both. Investment fees sit on top and vary with the option you’re in, with actively managed options generally more expensive than indexed ones. Across a working life these differences compound, so even 0.3% a year can translate to tens of thousands less at retirement.
Most funds also provide default life and total and permanent disability cover, with premiums deducted from your balance each month. Holding more than one super account can mean paying duplicate premiums without noticing. Consolidating accounts removes that leakage. Taken together, tax, fees, and insurance mean the amount showing up in your balance is always less than the gross figure your employer sent. On a $3,000 quarterly contribution, somewhere around $2,450 to $2,500 is a realistic landing figure, depending on your fund.
The Annual Concessional Cap
Across a full financial year, total concessional contributions from all sources are capped at $30,000 for 2025–26.5Australian Taxation Office. Contributions Caps That ceiling includes employer SG, any salary sacrifice amounts, and personal contributions you deduct. Going over the cap means the excess is added to your taxable income and taxed at your marginal rate, with an offset for the 15% already paid inside the fund. If you’re planning to salary sacrifice on top of SG, this is the figure to watch, especially in a year where you receive bonuses or change jobs.
When Super Must Be Paid
For salary and wages paid before 1 July 2026, employers pay SG quarterly, with contributions due 28 days after the end of each quarter:6Australian Taxation Office. Super Payment Due Dates
- July–September quarter: due 28 October
- October–December quarter: due 28 January
- January–March quarter: due 28 April
- April–June quarter: due 28 July
The money has to reach the fund by the deadline, not just leave the employer’s bank account. If a due date lands on a weekend or public holiday, payment must arrive by the next business day.
From 1 July 2026, the quarterly system is replaced by payday super under the Treasury Laws Amendment (Payday Superannuation) Act 2025. Employers will have to pay SG at the same time as salary and wages.7Australian Taxation Office. Payday Superannuation Announcements Instead of waiting up to three months plus 28 days, you’ll see contributions arrive with each pay cycle, and it will be far easier to spot missed payments quickly.