S uperannuation G uarantee L evy

1. Superannuation Guarantee Levy Chapter 6

2. Overview The purpose of the levy is to create forced savings and in the long term reduce dependence on welfare payments made by the Federal Government in the form of the old age pension Employers are required by the legislation to make a minimum contribution ( based on a percentage of the employee’s salary ), to a prescribed fund by a statutory date or face a charge. These contributions are paid to employees once they have reached a prescribed age (if born after 1957 retirement is currently 67 years). If the contributions are not made correctly the superannuation guarantee charge applies. The charge is far in excess of the contributions that should be made. A tax deduction is allowable for the contributions but not for the charge for non-compliance.

3. Entitlement to support An “employee”, is by definition, a person receiving a salary or wage as payment for work performed for another under contract. The person can be full-time, part-time, casual, or even a contractor as long as the labour portion of the service provided is more than 50% of the value of the contract. You may be considered to be an employer if you: Have some control over your employees; Are responsible for the payment of wages or salary; or Have the power to dismiss or hire employees.

4. How much to pay To work out how much you should pay, you need to determine two factors: • The charge percentage • The employees’ earnings base Charge Percentage • 13/14= 9.25%., 14/15 9.5% • This percentage is applied to each employee'sAverage weekly ordinary times earnings up to a maximum of $$49,930(14/15) per quarter($197,720) per year

5. Earnings Base Ordinary Times earnings: The total of an employee’s earnings for ordinary hours of work, include: salary, wages, shift allowances, commissions, over-award payments, certain leave payments, commissions and certain bonuses but not overtime.

6. Super Choice Some employee’s are eligible to choose the fund for theirfuture superannuation guarantee contributions except where: super is paid under a state award or industrial agreement super is paid under a certified agreement or an Australian Workplace Agreement they are a federal or state public sector employee excluded from choice by law or regulations Local Government Councillors. For those who are eligible to choose under the new rules, employers give employees a‘standard choice form’. Slides prepared by Peter Miller National Core Accounting Publications

7. Choice Employees don’t have to choose a superannuation fund if they don't want to. Employees can choose a fund at any time, but cannot require an employer to change the fund more than once a year. Employees must also give their employer written confirmation from the chosen fund that it will accept the employer's contributions. Slides prepared by Peter Miller National Core Accounting Publications

8. Exemptions from Superannuation Guarantee • Employees over the age of 70 • Employees earning less than $450 per month. • People who work less than 30 hours per week where the work is of a private/domestic nature (e.g. a part-time nanny or housekeeper). • Employees who are under the age of 18, working 30 hours or less per week. • Non-resident employees paid for work done outside Australia. • Resident employees paid by non-resident employers for work outside Australia. • Local Government Councillors.

9. When to pay contributions Employers have to pay sufficient superannuation contributions for each eligible employee at least four times a year, within 28 days of the end of each quarter Slides prepared by Peter Miller National Core Accounting Publications

10. Exemptions from Super Guarantee • Employees aged 70 and over • Employees earning < $450 per month • Employees < 18years and working < 30 hours

11. Superannuation Guarantee Charge • If an employer fails to contribute the minimum amount of superannuation, or • if an employee is eligible for choice of superannuation fund and the employer does not meet choice of superannuation fund obligations: 1.The employer is liable to pay the current contribution • the superannuation guarantee charge and • lodge a Superannuation guarantee quarterly statement.

12. Superannuation Guarantee Charge Employers can fail to meet the choice of superannuation fund requirements not offering the employee a choice of superannuation fund by issuing them with the Standard choice form not making the contributions to the employer fund nominated in the Standard choice form in the event the employee did not choose a fund, or not making the contributions to the employee’s chosen fund if the employee did choose a fund. Slides prepared by Peter Miller National Core Accounting Publications

13. Superannuation Guarantee Charge • The shortfall SG shortfall • Based on the actual salary paid for the year that appears on the employee’s PAYG payment summary. · • This includes any other payments made, such as overtime and bonuses. Choice shortfall • An administration fee • This is a $20 flat fee for each employee. • An interest component on the shortfall • This is 10% p.a. called the Nominal Interest Component. Slides prepared by Peter Miller National Core Accounting Publications

14. Superannuation Guarantee Charge The SGC is not tax deductible Slides prepared by Peter Miller National Core Accounting Publications

15. Superannuation Guarantee Charge Example • Jean Manoud commenced employment with Glen Industries on 3 January 2009 and is employed for the rest of the quarter ended 31 March 2009. • Jean’s earnings base for the quarter is $10,000, but his total salary/wages for the quarter is $15,000. • Glen Industries offered Jean choice of superannuation fund and he chose Rippa Superannuation Fund, but Glen paid $100 to Rippa and $700 to Emper Superannuation Fund. • Using the Superannuation Guarantee Shortfall and Choice Liability Worksheet below, calculate the total shortfall for Glen Industries.

16. SUPERANNUATION GUARANTEE SHORTFALL AND CHOICE LIABILITY WORKSHEET Slides prepared by Peter Miller National Core Accounting Publications

17. Superannuation Guarantee Charge Using the previous information, calculate the Superannuation Guarantee Charge for Glen Industries. The shortfall plus the interest charge is forwarded to the employee’s superannuation fund by the ATO. The ATO keep the $20 administration fee. Slides prepared by Peter Miller National Core Accounting Publications

18. Record Keeping There is no set form of record keeping. Documents must be retained showing: The earnings base used. The base year payroll. The total contributions made for each employee. The names of the superannuation fund or RSA to which the funds were paid. Calculations are also required if the Superannuation Guarantee Charge has to be paid.

19. Reporting Employers may choose to report their superannuation contributions to employees, but are not required by law to do so. Although not mandatory, the ATO advises employers to report to employees as an aid to managing employee relationships and pre-empting staff enquiries. Slides prepared by Peter Miller National Core Accounting Publications

20. Super Match/Superseeker There are currently about 6.4 million accounts on the Lost Member Register ( LMR ) with an approximate value of $12.9 billion. • Super Match via the Electronic Commerce Interface ( ETI ) provide super entities and other organisations the ability to request searches of ATO databases. • Identified accounts are forwarded to the superfund or organisation in a results report. Super Match/Superseeker benefits Reuniting members with lost, inactive and member protected accounts. Simplifying the process of locating monies. Promoting member loyalty by providing a new service.