With the end of financial year fast approaching, it is important to have an overview of key aspects of the super guarantee contribution rules and also stay up to date with the ever changing rules.
Super guarantee contributions
The amount paid is set at a percentage of each employee’s Ordinary Time Earnings (OTE). The Australian Government determines the Super Guarantee rate that, in 2018/19, is set at 9.5% of OTE. OTE generally includes the employee’s regular wage plus any shift loadings, commissions, paid leave and some allowances.
Generally, you have to pay super for an employee if they are 18 years or over and you pay them $450 or more (before tax) in salary or wages in a calendar month. It doesn’t matter whether the employee is full time, part time or casual. The maximum income on which employers must pay the Super Guarantee in 2018/19 is $54,030 per quarter ($216,120 per year).
Employees who are under 18 years old must meet the above conditions and work for more than 30 hours per week to be entitled to Super Guarantee.
Super guarantee payments
Super guarantee contributions for eligible employees are required to be paid by the 28th of the month following the end of each quarter. Contributions are considered paid when the super fund receives them.
In order to get a tax deduction for the super guarantee contributions, employers should pay these before the quarterly due dates. In order to get a tax deduction in the 2019 financial year, all the super contributions for the year should be paid and received by the complying super funds before 30 June 2019.
If employers have missed a payment or haven’t paid employee’s super on time, they are required to lodge a Super guarantee charge statement and pay the super guarantee charge.
Proposed SG Amnesty Legislation not enacted
The legislation to give effect to the proposed amnesty was introduced into Parliament on 24 May 2018. However, the legislation was not enacted and did not become law when Parliament concluded on 3 April 2019. If you took action to get your SG obligations back on track in anticipation of the proposed amnesty, please contact your advisor at Hoffman Kelly who will assist you further.
Single Touch Payroll
From 1 July 2019, the Single Touch Payroll system will also be extended to all employers, meaning the ATO will have up-to-date information on how much super employers owe to their workers. There will also be a requirement for employers to include “sacrificed ordinary times earnings amounts” and “sacrificed salary or wages amounts” paid to their employees superannuation funds in the amounts reported under the STP reporting rules.
High income earners (individuals who earn more than $263,157 a year) with multiple employers will be able to make wages from certain companies exempt from the Superannuation Guarantee (SG) to avoid breaching the Concessional Contributions Cap.
Age Pension age rises to 66
From 1 July 2019, the age at which you qualify for the Age Pension rises to 66, with the eligibility rising six months every two years until it reaches age 67 for everyone on 1 July 2023
Retirees can work more
The Pension Work Bonus will increase to $300 per fortnight, from $250. This allows pensioners to earn up to $300 each fortnight without reducing their Age Pension payments. This measure also applies to self-employed members.
If you have any further questions regarding the above changes and require assistance with your superannuation and tax planning, please contact your advisor at Hoffman Kelly Chartered Accountants.