The superannuation guarantee (SG) scheme, administered by the ATO, requires all employers to provide a prescribed minimum level of superannuation support in each financial year for each of their employees, subject to limited exemptions. Employers who fail to provide the prescribed minimum level of support are liable to an SG charge , equivalent to the amount of the shortfall plus an interest component and an administrative charge. The shortfall component of the charge is redistributed by the ATO to a complying superannuation fund, complying ADF, RSA or the Superannuation Holding Accounts Reserve (SHAR) for the benefit of those employees in respect of whom the charge was paid .

The legislation governing the scheme is the Superannuation Guarantee Charge Act 1992 , and the Superannuation Guarantee (Administration) Act 1992 (SGAA) and its Regulations (SGAR).

Employer SG contributions may be made to any complying superannuation fund, RSA or the SHAR for the benefit of an employee. Proposed amendments will require employers to offer employees a choice as to which fund will receive the SG contributions. Employers who do not comply with the choice of fund requirements will incur an increased SG shortfall liability.

Employer SG contributions for the benefit of employees are generally tax deductible, subject to limits, but the SG charge is not.

A ''complying superannuation fund'' for SG purposes is a fund or scheme that is a complying superannuation fund for the purposes of ITAA36 Pt IX , and an ''RSA'' has the same meaning as in the Retirement Savings Accounts Act 1997.

Employer superannuation contributions for employees which are made in accordance with a Commonwealth, State or Territory law, an industrial award or an occupational superannuation arrangement may be counted towards the employer's SG obligations. The operation of the SG scheme does not alter in any way the substantive jurisdiction, functions and powers of the Australian Industrial Relations Commission (AIRC) in superannuation matters under the Workplace Relations Act 1996 (see ''Proposed changes'' below).

For 1998/99, the required minimum rate of SG contributions for employees is 7%, regardless of the employer's annual national payroll. The level of superannuation support provided for each employee is measured on a quarterly contribution period basis. To avoid incurring an SG charge liability in 1998/99, the required SG contributions have to be made by 28 July 1999.