At first glance, an employer’s responsibilities and obligations under superannuation law can seem complex.
However, Australia’s superannuation rules are fairly straightforward once employers become accustomed to the rules and concepts.
All employers must choose a default super fund for an employee’s Super Guarantee (SG) contributions. A default fund is a fund where employers pay, on an employee’s behalf if they haven’t nominated a super fund, an employee’s super contributions. SG contributions are the minimum amount employers must pay to their employees.
Unless a specific enterprise agreement or award states otherwise, all employers must pay a set rate of SG contributions into each eligible employee’s super fund.
For the 2015-16 financial year, the SG rate is 9.5 per cent of an employee’s ordinary time earnings. This rate is set to increase gradually over the next few years.
Employers must pay SG at least four times per year by the quarterly due dates into a complying super fund and report this to the ATO.
For superannuation purposes, an employee’s income includes regular wages, as well as commissions, shift loadings and some allowances. Overtime payments are excluded from an employee’s income.
Some employees may ask their employer to deduct extra super from their pre-tax income, and pay it into their super fund. This activity, known as salary sacrificing, is a popular way for employees to boost their retirement income while also providing taxation benefits.
Employers must notify the ATO of all such payments in the PAYG Payment Summary.
Australia’s superannuation laws and regulations are often changing and employers need to stay up to date with any new rules and obligations introduced. Luckily, most default funds send members regular updates on changes to employer responsibilities and procedures.
For more information on superannuation obligations, contact us at Leenane Templeton on 02 4926 2300