In Xero, you can set a minimum monthly earnings amount before Super Guarantee Contributions (SGC) is calculated on an employee’s pay. But you can’t set a maximum earnings limit to stop paying super guarantee once an employee has hit the quarterly maximum super contribution base (MSCB).

What’s the maximum super contribution base (MSCB)?

It’s the maximum limit on any individual employee’s earnings base for each quarter ($58,920 a quarter from 1 July 2021). Note: this amount changes every year.

Why is it important to set a limit on employee SGC in Xero?

You could be overpaying Super Guarantee Contributions for employees who have exceeded the quarterly superannuation threshold. 

How to work out which employees have hit the MSCB?

Unfortunately, for all employee’s whose income exceeds the MSCB – you can’t set a cap for SGC in Xero.  You may be managing this process manually, calculating which employees are reaching their limits in Excel. This is manageable for employees on a fixed salary, but if you’re dealing with staff with variable commissions, this task is notoriously time consuming and prone to error.  Don’t stress, there’s a better way!  Run a SGC Threshold Check to automatically identify any employee that’s approaching or has exceeded the maximum superannuation contribution threshold base for the quarter. It will automatically list all flagged employees and will show the amount of Super that’s being paid above the threshold for a quick and easy fix. Here’s an example of some employees who exceeded their threshold for the quarter using Paytools SGC Threshold Check:
Employee SGC in Xero

How to change an employee’s SGC in Xero once they’ve hit the threshold?

If an employee has already hit the threshold for the quarter and you want to stop paying SGC for the rest of the current quarter, follow these steps to adjust their Super contribution to 0.00: 

  1. In the Payroll menu, select Employees and select the relevant employee.
  2. Under the Pay Template tab, click on the employee’s SGC Super line.
  3. Change the Calculation Type to Percentage of Earnings and enter the Percentage as 0.00. 
  4. Click Save.
Adjust Super
Employee SGC in Xero
Don’t forget to change the super line back to the normal setting after the quarter has ended so they can keep earning SGC for the next quarter. If an employee earns more than the MSCB (currently $58,920 per quarter, $235,680 per year for 2021/2022) follow these steps to manually pay SGC:
  1. In the Payroll menu, select Employees and select the relevant employee.
  2. Under the Pay Template tab, click on the employee’s SGC Super line.
  3. Change the Calculation Type to Fixed Amount and enter a value to pay each pay cycle that will equate to the maximum of $5,892 per quarter.
  4. For example, if monthly pay $5892/3 = $1,473
  5. Click Save.
Xero Fixed Super
Fixed quarterly amount Xero

Note: Don’t forget to change the super line each year as the MSCB threshold increases.

Hope you found this article helpful! For a limited time we’re offering free access to our Xero certified payroll compliance app, Paytools. Start your free trial today to make SGC tracking a breeze.