Employer Superannuation obligations
Keeping up to date with your superannuation contributions is serious business.
Failure to comply can lead to some hefty fines from the Taxation office. In this
article we will address the basic obligations to some of the more recent changes.
If you are an employer you must make regular superannuations contributions
for your employees. This applies to full-time, part-time or casual employees.
The minimum amount you must pay is 9% of the employees normal earnings. These contributions
must be paid regularly - atleast 4 times a year for every financial quarter. These payments
must be made within 28 days of the last day of the financial quarter.
| 1st July - 30th September | 28 October |
| 1st October - 31st December | 28 January |
| 1st January - 31st March | 28 April |
| 1st April - 30 June | 28 July |
When it comes to the Tax office, you are either friend or foe. Pay your contributions on time and they are tax deductable (up to a limit).
Late payments mean you will join the axis of evil. You will be hit with a Superannuation guarantee charge plus interest and you will have to lodge a
Superannuation guarantee charge statement. There are cut-off dates for these lodgments and further charges if you don't comply. To keep this article light, we won't go into the science of calculating the charges
you have to pay if you are late.
What are considered normal earnings?
The technical term for normal earnings is an 'earnings base'. This
is the figure that you use to calculate how much superannuation to pay. So what is included
in the earnings base? Generally anything you pay an employee for ordinary hours of work - excluding
overtime makes up the earnings base. Below is a table outlining which items are included in the earnings base.
| Normal hours | Yes |
| Allowances | Yes |
| Overtime | No |
| Reimbursments | No |
| Bonuses related to performance | Yes |
Bonuses not related to performance
eg. Christmas bonus | No |
| Commissions | Yes |
| Shift loading | Yes |
| Annual leave | Yes |
| Sick leave | Yes |
| Long service leave | Yes |
| Maternity/Paternity leave | No |
| Redundancy payments | No |
| Payment in lieu of notice | No |
Accrued annual, long service
and sick leave paid on termation | No |
| Dividends | No |
| Workers compensation payments | No |
Earnings base limit
You do not have to pay superannuation for any earnings base over $35,240.
This figure is adjusted annually.
Employees choice of superannuation fund
From 1st July 2005, employees were given the option to choose their superannuation fund.
This means that you must provide employees with a 'standard choice form (NAT 13080)' within
28 days of their start date. They don't have to complete the form, but you must give them the choice
if they are eligable. You also have to provide a form to any current employees if they request one in
writing.
If an employee chooses their own fund make sure they provide
- Fund name and contact details
- Employee's account name with the fund
- Fund account number
- Any identification number you use for the employee
- The superannuation product identification number (SPIN) if it has one
- Fund's ABN number
- Payment method and details
You have two months to arrange payment into their nominated fund.
Choosing a compliant fund
If they don't nominate a fund, you still need to make contributions to a fund of your choosing.
(A maximum of 1 fund per employee). In either case you need to make sure any fund that is chosen
is compliant (If you choose one that is not compliant, this does not count as satisfying your
superannuation obligations!). You can find out if a fund is compliant by simply asking the fund
managers. If they tell you it's compliant and it isn't, you may be covered from paying any penalties.
If a self-managed fund is chosen, evidence must be provided by the employee that it is a regulated
fund. This evidence must come from the Tax office and must include either a notice of registration
called 'Advice about regulation of your self managed fund' for a new fund or a letter of
compliance called 'Notice of complying fund status - self managed superannuation fund', if the fund
is more than 2 years old.
Superannuation Record Keeping Requirements
You must keep records of superannation transactions for five years.
This includes evidence of how you calculated the superannuation amounts
paid for each employee.
There are no guidelines about the reporting format but it must be in
English (or easily convertable to English).
If you have lodged a superannuation change statement, you must keep
details of how you calculated the amounts in the statement.
Choice of Superannuation fund record keeping requirements
You must keep records to show that you have provided eligable employees
a choice in selecting their superannuation funds. These records include:
- keeping details of employees who are not eligable to choose their superannuation fund.
For example an employee might be under an award that requires superannuation support to be provided
- Evidence that chosen funds meet insurance requirements. This could be a copy of the disclosure statment.
- Records that you have provided eligable employees with 'Standard choice forms'
- Information provided by employees about their nominated fund
- Receipts or other documents issued by a fund showing that you have made contributions
A penalty of
up to $3,300 applies for not keeping records.
We hope this article has been helpful in informing you of your superannuation obligations as an employer. For more
information please visit the Australian Tax Office website
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