Superannuation Guarantee (Administration) Regulations 2018

The Regulations layer several concepts onto the statutory scheme. Some are defined in section 5, while others are built inside operative provisions.

Defined benefit member (Part 2). The Act itself defines “defined benefit superannuation scheme”, but paragraph 6AA(b) allows the regulations to deem additional categories of members to be defined benefit members for the purpose of the reduced charge percentage that may apply under subsection 19(2CA). Section 6 of the Regulations does this for members and certain non-member spouses under the Military Superannuation and Benefits Act 1991, the Defence Force Retirement and Death Benefits Act 1973, the Superannuation Act 1976, the Superannuation Act 1990, and preserved benefit members under the Public Sector Superannuation Scheme Trust Deed. The provision catches not only active members but also persons with preserved benefits, ancillary accounts, and those holding family law interests.

Benefit certificate and notional employer contribution rate (Part 3). A defined benefit employer who wishes to rely on the “benefit certificate” method to calculate its individual superannuation guarantee shortfall must obtain a certificate from an actuary (section 7). The certificate must name each scheme, specify or identify the minimum requisite benefit, state the notional employer contribution rate for each class of employee, and include the actuary’s details and signature. The “notional employer contribution rate” is the single percentage that, when applied to an employee’s ordinary time earnings, is taken to represent the employer’s contribution level to a defined benefit scheme for the purpose of testing whether the charge percentage has been met. Sections 8, 9 and 10 prescribe how that rate is determined. Where the minimum requisite benefit for a class is calculated as an accumulation of employer contributions at a uniform rate, the notional rate is simply that employer contribution rate (section 9). For true defined benefits, section 10 sets out a complex actuarial formula that relies on factors such as the member’s age at withdrawal (DF), the multiple of salary used in the scheme (FOTE, FSAL), the member contribution rate (MCR), tax rates (TR, TCR), and components of the minimum requisite benefit that accrued before 1 July 1992 (PAB1) or between 1 July 1992 and 30 June 2008 (PAB2). The formula can only be used if stringent conditions are met, including that MCR and TCR have not changed since 1 July 1992, the scheme uses a specified multiple of ordinary time earnings, and no part of the minimum requisite benefit is an untaxed element of the taxable component. If section 9 or 10 does not apply, an actuary may certify an alternative method that is consistent and produces a comparable rate (subsection 8(2)).

Excluded employees (section 11). For the purposes of paragraph 27(1)(d) of the Act, which excludes certain employees from the superannuation guarantee charge calculation, the Regulations prescribe holders of specific temporary visas who occupy senior executive positions. These include Subclass 456 (Business (Short Stay)), Subclass 400 (Temporary Work (Short Stay Specialist)), Subclass 482 (Temporary Skill Shortage), and the former Subclass 457 (Temporary Work (Skilled)) visa holders, provided the employee is a national managing executive, deputy national managing executive, state manager, or a senior executive with substantial responsibility, appropriate qualifications and a full-time role, or is establishing a business activity in Australia.

Excluded salary or wages (sections 12 and 12A). Under paragraph 27(1)(e) of the Act, certain earnings are not counted as “salary or wages” for superannuation guarantee purposes. The Regulations add parental leave pay, wages paid by a usual employer while an employee is absent on eligible community service activity (but not if the activity is performed in the capacity of an employee of that employer), wages paid by a usual employer while an employee is absent on Australian Defence Force service (other than ADF pay covered by section 29 of the Act), green army allowance, and wages covered by a scheduled international social security agreement that exempts the employer. The Regulations also exclude certain Commonwealth-funded aged care payments: wages funded by the Aged Care Workforce Retention Grant (from 1 June 2020) and the Aged Care Registered Nurses’ Payment (from 1 November 2022). Section 12A carves out the extra amount of wages an employer paid to satisfy the JobKeeper wage condition during the COVID-19 pandemic, to the extent that the amount exceeds what was required for work performed and is reasonably attributable to meeting that condition. The section applies to jobkeeper fortnights beginning on or after 30 March 2020.

Choice of fund and death insurance (Part 5). The Act’s choice of fund regime allows an employer to make contributions to a default fund only if that fund meets prescribed requirements, including offering a minimum level of death insurance. Section 14 of the Regulations sets that level. For MySuper members (other than defined benefit members) the fund must provide insurance in the event of death at prescribed age-banded amounts (ranging from $50,000 for those aged 20-34 down to $7,000 for those aged 50-55), or at a premium of at least $0.50 per week. If the member has elected to reduce or opt out of insurance, the fund need only offer insurance at that level. For members other than MySuper members, the requirement is to offer insurance at those same levels, or, in the case of a defined benefit member, to provide a death benefit with a future service component that is at least equivalent. The section contains six exceptions, including for pre-1 July 2005 Federal award contributions, RSAs, capital guaranteed funds, alternative employer-provided death cover, unavailability of cover due to health or occupation, certain funds that had a $50,000 death benefit rule on 11 March 2005, and the situation where section 68AAA of the Superannuation Industry (Supervision) Act 1993 prevents insurance from being provided.

Stapled fund (sections 17A-17C). The Act introduced the concept of a “stapled fund” to reduce duplicate accounts. The Regulations prescribe the requirements for identifying a stapled fund. A fund qualifies if it is a complying superannuation fund or RSA, the employee is a member, the Commissioner is aware the fund can accept contributions, and the Commissioner can disclose information to the employer or agent (subsection 17A(2)). If multiple funds satisfy these conditions, a tiebreaker applies in the following order: the fund most recently notified by the Commissioner under section 32R; the fund that received the most recent contribution during the “selection period” (from the start of the last completed financial year to the relevant time, per subsection 17A(4)); the fund with the largest account balance at the end of the previous financial year; or the fund the Commissioner determines is most appropriate having regard to when membership commenced and other relevant matters. Section 17B requires that an employer’s request to the Commissioner for a stapled fund notification be made for the purpose of complying with the choice of fund requirements that relate to stapled funds. Section 17C allows the Commissioner to change an earlier notification if an error is identified and, where a fund had been identified, the Commissioner is unaware of any contributions having been made to that fund by the employer for that employee.

Shortfall component administration (Part 6). The “shortfall component” is defined in sections 64A and 64B of the Act and represents the amount the Commissioner may pay to a complying fund for an employee’s benefit. The Regulations require the Commissioner to give written notice to an employee if the shortfall component exceeds $20; below that the notice is discretionary (section 18). The notice must state the date, employer name and amount and may specify a particular relevant fund. An employee under 55 who has retired due to permanent incapacity or invalidity must lodge the documents described in paragraph 66(b) of the Act (section 19(2)). A legal personal representative of a deceased employee must lodge a written notice of death and the death certificate (section 19(3)). Otherwise the employee may request a fund’s responsible officers to collect the amount from the Commissioner, or lodge a nomination of a relevant fund. If the Commissioner’s notice specified a fund and the employee does not wish to use it, the employee may nominate a different fund (section 19(5)). Responsible officers who receive a request have statutory obligations (section 20): they must give the employee a receipt notice, must notify the employee within 14 days if they decline, and if they accept must lodge the request with the ATO within 14 days or such further time as the Commissioner allows. Breach of any of these obligations is a strict liability offence carrying a penalty of 5 penalty units. An employee who does not respond within 28 days to a notice that specified a fund is taken to have nominated that fund (section 21(3)). The Commissioner must not pay a shortfall component unless sufficient information is available to identify the employee (section 23).

The Regulations directly affect several groups.

Employers, especially those who participate in defined benefit superannuation schemes, must obtain and maintain current benefit certificates, understand which employees are excluded, exclude the prescribed salary or wages from their superannuation guarantee calculations, and calculate the nominal interest component correctly if they are late. All employers with obligations under the choice of fund regime must assess whether their default fund satisfies the death insurance requirements in section 14, and must use the stapled fund infrastructure when onboarding a new employee who has not made a choice.

Actuaries who issue benefit certificates under Part 3 must apply the detailed formulae in sections 9 and 10, or certify an alternative consistent method, and must ensure the certificate complies with the content requirements of section 7.

Employees who are members of the prescribed military or public sector schemes are affected by being classified as defined benefit members, which may alter the superannuation support their employer is required to provide. Employees who are visa holders in senior executive roles may find themselves outside the superannuation guarantee system entirely. Employees who are entitled to a shortfall component payment from the Commissioner receive notices, must lodge nominations, and interact with fund trustees. The deemed nomination rule creates a default consequence for inaction.

Superannuation fund trustees and RSA providers (collectively “responsible officers” under the Regulations) who receive requests to collect a shortfall component face strict liability offence provisions if they fail to comply with the procedural steps in section 20. They also need to be aware of the stapled fund tiebreaker rules and the circumstances in which their fund may be identified as an employee’s stapled fund.

The Commissioner of Taxation is given discretions at multiple points: allowing a later lodgment date for a benefit certificate (paragraph 7(1)(c)), giving or withholding a shortfall component notice where the amount is $20 or less, specifying a fund in a notice, extending the 14-day lodgment period for a fund’s response, identifying the most appropriate stapled fund where no other tiebreaker resolves the matter, and changing an earlier stapled fund notification in limited circumstances.

Payroll professionals, accountants and compliance advisers must operationalise the excluded salary provisions, including the JobKeeper carve-out and the aged care payment exclusions, and must ensure that the employee information gathered for a chosen fund satisfies the detailed list in section 16.

Duty to obtain a benefit certificate. An employer who participates in a defined benefit scheme and wishes to use the benefit certificate method must obtain a certificate from an actuary by the time the superannuation guarantee statement for the quarter is lodged, or by the time contributions would otherwise fall due (section 7).

Duty to use the correct notional employer contribution rate. The actuary must calculate the rate in accordance with section 9 or 10, or certify a comparable method under subsection 8(2). This rate then forms the basis of the employer’s shortfall calculation.

Duty to exclude prescribed salary or wages. When calculating the charge percentage or total salary or wages for a quarter, an employer must disregard the items listed in section 12 and, during the relevant period, the excess JobKeeper wage amounts described in section 12A.

Duty to meet default fund insurance requirements. If an employer makes contributions to a default fund under the choice of fund provisions, the fund must provide or offer the death insurance specified in section 14. The employer must assess whether any exception applies (for example, because the employee is covered by an alternative group policy under paragraph 14(6)(d)).

Duty to request a stapled fund notification. An employer who does not receive a choice from a new employee must request a stapled fund notification from the Commissioner under section 32R of the Act. Under section 17B of the Regulations, that request must be made for the specific purpose of complying with the choice of fund requirements that relate to stapled funds. The employer is then entitled to rely on the Commissioner’s notification, subject to the Commissioner’s ability to change it under section 17C.

Employee right to information and nomination. An employee who receives a shortfall component notice has the right to nominate a fund or to request a fund’s responsible officers to collect the amount. If the employee does not act within 28 days and the notice specified a fund, the employee is deemed to have nominated that fund (section 21(3)). An employee may also make a nomination proactively under section 22.

Duties of responsible officers. Upon receiving a request from an employee under paragraph 19(4)(a) or 22(a), the responsible officers must issue a receipt notice, must notify the employee if they decline within 14 days, and if they accept must lodge the request with the ATO within 14 days. Each of these steps is backed by a strict liability offence provision.

Right of Commissioner to refuse payment. Section 23 states the Commissioner must not pay a shortfall component unless the Commissioner has sufficient information to identify the employee. This operates as a protective condition for the revenue.

The Regulations themselves create only a small set of direct criminal offences. Section 20(2), (4) and (6) each provide that failure by the responsible officers of a relevant fund to comply with the notice, notification or lodgment obligations is an offence of strict liability punishable by 5 penalty units. These provisions engage section 6.1 of the Criminal Code (strict liability) and eliminate any fault element for the physical elements of the offence. The maximum fine for a body corporate is five times the penalty unit amount (see section 4B of the Crimes Act 1914). As at the time of the Regulations, a penalty unit is set under the Crimes Act 1914 and is indexed.

Broader enforcement is located in the parent Act. For example, an employer that fails to pay the correct superannuation guarantee charge may be subject to the charge itself, the nominal interest component (which the Regulations set at 10 per cent per annum under section 13), and administration fees. The Part 4 exclusions and Part 5 choice of fund requirements operate to define the scope of those primary liabilities. An employer that fails to obtain a benefit certificate, or obtains one that does not comply with the Regulations, may lose the ability to rely on the certificate method and may face an individual shortfall calculated under the Act’s default rules.

The strict liability offences in section 20 apply to “responsible officers”, defined in section 5. For a complying superannuation fund or approved deposit fund, the trustees are the responsible officers. For an RSA, it is the RSA provider. Compliance professionals should note that the offences attach to the act of failing to give notice or failing to lodge within the required time, meaning any delay beyond 14 days without a Commissioner extension may constitute an offence regardless of intention.

The Regulations are threaded through a wide set of other Commonwealth statutes and instruments.

Superannuation Guarantee (Administration) Act 1992. The Regulations are made under this Act and give content to numerous provisions, including the defined benefit member deeming (paragraph 6AA(b)), the exclusion of prescribed employees (paragraph 27(1)(d)) and salary or wages (paragraph 27(1)(e)), the nominal interest rate (section 31), the choice of fund insurance requirements (paragraphs 32C(2)(d) and (e)), prescribed legislation for choice compliance (subsection 32C(9)), the standard choice form (paragraphs 32P(1)(e) and (g)), the stapled fund provisions (sections 32Q and 32R), and the shortfall component payment mechanism (sections 64A, 64B, 65 and 66). Virtually every Part of the Regulations is an extension of the Act.

Superannuation Industry (Supervision) Act 1993 and Regulations. The Regulations adopt the SIS Regulations’ definitions of “minimum requisite benefit” and “successor fund”. Section 14(7) references section 68AAA of the SIS Act (which prevents insurance being provided in certain circumstances). The insurance requirements in Part 5 of the Regulations are closely tied to the fund-level obligations under the SIS framework.

Corporations Regulations 2001. The term “capital guaranteed fund” is given the same meaning as in those regulations.

Fair Work Act 2009. The exclusion in section 12 for salary or wages paid while an employee performs an “eligible community service activity” adopts the definition in subsection 109(1) of the Fair Work Act 2009.

Migration Act 1958 and Migration Regulations 1994. The excluded employee categories in section 11 are defined by reference to specific visa subclasses under the Migration Act and the nomination criteria in the Migration Regulations. Compliance teams in multi-national enterprises must read these provisions together with the migration law to determine whether a senior executive on a temporary visa is outside the superannuation guarantee net.

Social Security (International Agreements) Act 1999. The exclusion in paragraph 12(1)(e) applies where a “scheduled international social security agreement” provides that the employer is not subject to the Act. The term is defined by reference to that Act.

Taxation Administration Act 1953. The standard choice form (section 17) is the form approved under section 388-50 in Schedule 1 to the TAA 1953. The stapled fund identification process relies on contribution statements given under Subdivision 390-A of Schedule 1 to that Act. The Commissioner’s general administration of the superannuation guarantee charge, including the shortfall component regime in Part 6, is governed by the TAA’s provisions.

Family Law Act 1975. The defined benefit member deeming in section 6 refers to non-member spouses within the meaning of Part VIIIB or VIIIC of the Family Law Act, extending the treatment to persons who hold a family law interest in a military or public sector superannuation scheme.

Commonwealth social security law. The exclusion for green army allowance uses the definition from the Social Security Act 1991.

State and Territory legislation. Section 15 lists a series of state Acts under which contributions are taken to comply with the choice of fund requirements. This eliminates any doubt that contributions under state parliamentary, emergency services, local government and electricity corporation superannuation schemes from New South Wales, Victoria, Western Australia, South Australia, Queensland and Tasmania meet the choice test.

Coronavirus Economic Response Package. Section 12A borrows the definition of “jobkeeper fortnight” and “wage condition” from the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020, directly tying the superannuation guarantee exclusion to the JobKeeper scheme design.

The instrument itself is a 2018 remake of the 1993 Regulations, but it incorporates several later amendments, identifiable from the text and transitional provisions.

Treasury Laws Amendment (Protecting Your Superannuation Package) Regulations 2019. Section 27 states that the amendment made by item 29 of Schedule 1 to those Regulations applies to contributions made on or after 1 July 2019. That item is the one that amended the insurance requirements in section 14 to align with the Protecting Your Superannuation Package reforms, which limited insurance for inactive low-balance accounts and members under 25. The text of section 14 as it appears in the compilation includes the age-banded insurance levels and the provisions dealing with MySuper members who have elected to reduce or opt out of insurance, and the exception for circumstances where section 68AAA of the SIS Act prevents insurance from being provided. The transitional provision ensures that employers and funds can point to a clear start date for the new requirements.

Aged care workforce measures. Paragraphs 12(1)(f) and (g) were added later to exclude wages funded by the Aged Care Workforce Retention Grant (from 1 June 2020) and the Aged Care Registered Nurses’ Payment (from 1 November 2022). These exclusions reflect policy decisions to ensure that Commonwealth grant-funded wage top-ups did not create unintended superannuation guarantee obligations.

JobKeeper exclusion. Section 12A was inserted to prevent the JobKeeper wage condition from distorting superannuation guarantee liabilities. It ensures that only the amount the employer was required to pay for work performed, or leave taken, attracts superannuation guarantee obligations; the top-up paid solely to satisfy the JobKeeper wage condition is excluded, provided the excess is reasonably attributable to that purpose.

Stapled fund provisions. Sections 17A, 17B and 17C were inserted to operationalise the stapled fund regime that commenced on 1 November 2021 (under amendments to the Act). The tiebreaker rules and the rules for changing an earlier notification reflect the need for a clear, administrable hierarchy that the Commissioner can apply using data held by the ATO.

Tasmanian public sector superannuation reform. Section 25 provides that paragraph 15(d) applies from 31 March 2017, confirming that contributions under the Public Sector Superannuation Reform Act 2016 (Tas.) satisfy the choice of fund requirements from that date.

Continuity provision. Section 26 is critical: it provides that anything done under the 1993 Regulations that could be done under the 2018 instrument continues to have effect as if done under the new instrument. This avoids disruption, particularly for benefit certificates, notices and nominations that straddle the commencement of the 2018 Regulations.

The source text does not reference any court decisions, litigation, or interpretive disputes. The Regulations are drafted in a prescriptive and self-contained manner, with detailed formulae and bright-line criteria. The areas most likely to generate dispute in practice include the application of the section 10 notional employer contribution rate formula to non-standard defined benefit designs, the scope of the actuary’s discretion under subsection 8(2) to certify a comparable method, and whether a particular employee falls within the senior executive visa exclusion in section 11. None of these points is, however, the subject of any recorded judicial consideration within the instrument itself. The strict liability offences in section 20 are a classic structure for regulatory enforcement and have not, on the face of the Regulations, been tested in any reported matter referred to in the text.

Benefit certificate timing traps. An employer who fails to obtain a benefit certificate by the date the superannuation guarantee statement is lodged loses the ability to use the certificate method for that quarter unless the Commissioner allows a later date. The Commissioner’s discretion under paragraph 7(1)(c) is not accompanied by any criteria; an employer cannot assume an extension will be granted.

The deemed nomination rule. An employee who receives a section 18 notice that specifies a fund has 28 days to nominate a different fund. Silence results in a deemed nomination of the Commissioner’s chosen fund. Practitioners advising employees should flag this deadline prominently. For employers, the shortfall component process is largely a matter between the employee and the Commissioner, but the original underpayment can still carry reputational and industrial consequences.

Strict liability for fund trustees. The 14-day clock under section 20 is unforgiving. A trustee or RSA provider that, through administrative oversight, fails to lodge a request within 14 days faces a criminal offence of strict liability. There is no defence of reasonable mistake or due diligence in the Regulations themselves, though the general Criminal Code defences (such as intervening event) may apply in narrow circumstances.

The insurance requirement exceptions are not self-executing. An employer relying on the alternative death cover exception in paragraph 14(6)(d) must ensure the alternative cover “does not provide for a potential benefit to the employer following the death of the employee”. A policy that pays a benefit to the employer, even indirectly, will disqualify the exception.

JobKeeper attribution. Section 12A requires the excess amount to be “reasonably attributable” to satisfying the wage condition. During a quarter in which an employee worked variable hours, attributing the top-up correctly demands careful contemporaneous record-keeping. Auditors may scrutinise whether the employer can demonstrate the nexus.

Stapled fund tiebreaker uncertainty. Where the first three tiebreakers do not produce a result, the Commissioner selects the “most appropriate” fund having regard to when the employee became a member and “any other relevant matters”. The breadth of that discretion means an employer cannot safely predict which fund will be identified and should not attempt to second-guess the Commissioner’s determination.

Information sufficiency for shortfall component payment. Section 23 operates as a hard barrier: the Commissioner must not pay unless the Commissioner can identify the employee. An employee who has not provided a tax file number or whose details are incomplete across ATO systems may find that a shortfall component sits unpaid indefinitely.

For employers with defined benefit schemes.

• Identify whether any members fall within section 6 of the Regulations as deemed defined benefit members. Ensure your benefit certificate covers those members correctly.
• Engage an actuary well before the due date for each quarter’s superannuation guarantee statement. The actuary should produce a benefit certificate that complies with every element of section 7(2). Retain evidence that the actuary’s method satisfies section 9 or 10, or that the alternative method under subsection 8(2) has been certified as consistent and comparable.
• Revisit certificates if there is any change in member contribution rate, scheme design or the governing rules that affects the minimum requisite benefit formula.

For employers generally.

• Audit your workforce for employees who may fall within the section 11 visa exclusions. Verify current visa status directly against Department of Home Affairs records. Do not rely on the employee’s self-classification.
• Map your payroll codes to the excluded salary or wages categories in sections 12 and 12A. Ensure parental leave, eligible community service leave, and ADF leave payments are flagged and excluded from the superannuation guarantee calculation, but confirm whether any portion of the payment relates to annual leave, sick leave or long service leave, which remains within the charge base under subsection 12(4). If you received the Aged Care Workforce Retention Grant or the Aged Care Registered Nurses’ Payment, segregate the funded wages and document the link.
• If you were a JobKeeper participant, retain working papers that show for each jobkeeper fortnight the amount required to be paid for work or leave, and the amount paid solely to satisfy the wage condition. Ensure the “reasonably attributable” test in paragraph 12A(2)(b) is satisfied by contemporaneous board minutes or payroll reconciliations.

Choice of fund and stapled fund.

• Confirm that your default fund meets the death insurance requirement in section 14 for each employee you place into it. If relying on an exception, document precisely which paragraph of subsection 14(6) applies. If using the alternative cover exception, obtain a written confirmation that the policy does not confer any potential benefit on the employer on the employee’s death.
• When a new employee starts and does not make a choice, request a stapled fund notification from the Commissioner through the ATO’s online services. The request must explicitly be for the purpose of complying with the stapled fund aspects of the choice of fund requirements (section 17B). Do not request a stapled fund for a purpose outside that scope.
• If the Commissioner changes an earlier stapled fund notification, act on the most recent notification. Document the date of receipt and adjust contributions prospectively.

Employees and their advisers.

• On receipt of a section 18 shortfall component notice, check whether a fund is specified and, if you prefer a different fund, lodge a written nomination within 28 days. If you are under 55 and have retired due to permanent incapacity or invalidity, promptly lodge the documents required by paragraph 66(b) of the Act. A legal personal representative dealing with a deceased employee’s entitlement must lodge the written notice of death and the death certificate (section 19(3)).
• If you wish to initiate a collection independently of a Commissioner notice, use section 22. You may either request a fund’s responsible officers to collect the amount or lodge a written nomination directly with the ATO.

Fund trustees and RSA providers.

• Designate a responsible officer to receive and process employee requests under Part 6. Implement a system that logs the date of receipt and issues the written receipt notice required by subsection 20(2) immediately.
• Set internal reminders to decide whether to accept or decline a request within 14 days. If you decline, you must notify the employee within those 14 days (subsection 20(4)). If you accept, the request must be lodged with the ATO within 14 days, subject only to a written extension from the Commissioner. Any failure at these steps constitutes a strict liability offence; a compliance calendar and clear delegation are essential risk-management tools.
• Ensure that ATO contribution reporting under Subdivision 390-A of Schedule 1 to the Taxation Administration Act 1953 is accurate and timely, because that data feeds the stapled fund tiebreaker under paragraph 17A(3)(b) (most recent contribution in the selection period) and the account balance comparison under paragraph 17A(3)(c).