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Under Federal law, employers are required to contribute to employees' personal retirement funds under the Superannuation Guarantee (SG) system.

The superannuation obligations of employers, known as the Superannuation Guarantee, are prescribed by the Superannuation Guarantee (Administration) Act 1992 and the Superannuation Guarantee (Administration) Regulations 2018.

The ATO provides an overview of the system on its website.

As noted above (see 1.1), some obligations that arise under ordinary employer-employee relationships are extended to include contractors principally engaged for their labour. The SG regime therefore treats a broader range of contractors as employees compared to other areas of Australian tax law. The scope of the extension to contractors principally engaged for their labour was considered by the Full Federal Court in Jamsek v ZG Operations Australia Pty Ltd (No 3) [2023] FCAFC 48.

There are generally two types of superannuation fund:

1. Ìý

   •ÌýÌýÌýÌý defined contributions funds, and

2. Ìý

   •ÌýÌýÌýÌý defined benefits funds

The latter are now rare, though historically they were more common.

Strictly speaking, superannuation is not a tax because the contributions made by employers are not paid