Getting your Xero file superannuation ready
Ensuring superannuation is calculated and processed correctly is one of the most important parts of running payroll.
With the upcoming introduction of Payday Super, wherein employers are required to pay superannuation on payday – it’s important to ensure your payroll system is prepared.
Xero provides a powerful set of tools to automate calculations, streamline super payments and keep your payroll compliant with Payday Super, provided your file is set up correctly.
This guide brings together the key steps small and medium businesses can take to get their Xero payroll settings right, reduce manual work and avoid payroll mistakes.
How Xero handles superannuation
Xero automatically calculates superannuation in every pay run based on your payroll configuration. Once your employees, pay items and superannuation rules are set up correctly, Xero:
- Calculates super guarantee for each employee in every pay run.
- Applies additional employer contributions if set up.
- Tracks super accrued for each pay cycle.
What do I need to change?
If you’re already using Xero Auto Super, you will need to change your process to release super payments alongside your regular pay releases.
While calculations are automatic, you still need to ensure your Xero file is configured correctly so super can be processed and paid without delay.
Key areas to check in your Xero payroll file
A few initial setup checks will ensure Xero can calculate and process super smoothly.
Organisation settings
Review the payroll-related details stored in your Xero organisation, including:
- Australian Business Number.
- Registered business address.
- Contact email for payroll notifications.
Ensuring these are accurate helps prevent errors when submitting payroll or super payments.
Employee details
Every employee record must contain complete and correct information, including:
- Tax File Number.
- Selected superannuation fund with the correct Unique Superannuation Identifier (USI), or self-managed super fund details where relevant.
- Email address to receive payslips.
Capturing these details during onboarding helps avoid future payroll issues.
Super guarantee settings
Check that:
- The correct super guarantee rate is applied to each employee.
- Super-exempt earnings items are set up properly.
- Any additional employer contributions are configured.
Correct settings ensure Xero can automatically calculate super for every pay run.
Setting up Xero Auto Super
Xero offers Auto Super, a built-in clearing house that lets you submit superannuation payments directly from your payroll dashboard. Once registered, Xero prepares compliant SuperStream payments for you.
To register:
- Select Payroll, then Payroll settings.
- Choose Superannuation.
- Select Register for Auto Super.
- Enter your business and bank details.
- Review and accept the terms, then submit.
Before using Auto Super, check that:
- Your nominated payroll bank account is connected and verified.
- Authorised payment approvers are correct.
- Your payment method (direct debit or bank transfer) is ready for processing.
Once set up, Auto Super allows you to prepare and submit electronic super payments quickly and accurately from Xero.
Understanding how Xero processes super payments
Xero follows a clear workflow to ensure superannuation is calculated and processed correctly. Each time you post a pay run, Xero will:
- Calculate super based on employee settings.
- Add the super amounts to the next available Auto Super batch.
- Provide visibility over payment status in the Auto Super dashboard.
This gives employers a simple, transparent way to manage superannuation throughout the year.
Practical steps to keep your Xero payroll running smoothly
A few proactive habits can help businesses reduce issues and keep payroll accurate:
- Review pay cycles to ensure they match your operating and cash flow needs.
- Confirm employee super fund details during onboarding.
- Keep your payroll bank account funded for super payments.
- Check settings regularly as Xero releases new payroll features.
- Speak with your accountant if you have contractors, irregular pay cycles or award-based complexities.
Need help reviewing your Xero payroll setup?
Every business uses Xero a little differently, and payroll requirements vary widely. Including for employers with multiple pay cycles, allowances or award-covered employees.
If you’d like help reviewing your Xero file or making sure your payroll settings are correct, the AFS team can assist. Circumstances can differ between businesses, so reach out for tailored support.
Ready to move to Xero? Contact us today.
