Employer super resource guide 2017/18

Transcription

1 Employer super resource guide 2017/18

2 The information contained in this publication is given in good faith and has been derived from sources believed to be reliable and accurate. No warranty as to the accuracy or completeness of this information is given and no responsibility is accepted by VicSuper Pty Ltd or its employees for any loss or damage arising from reliance on the information provided. This publication does not take into account your financial situation, objectives or needs or those of your employees. VicSuper recommends you or your employees seek professional advice for your own circumstances and obtain a copy of the VicSuper FutureSaver Product Disclosure Statement. You can contact VicSuper to make an appointment to see one of our VicSuper representatives. VicSuper Pty Ltd ABN ( VicSuper ) is the Trustee of VicSuper Fund ABN The Trustee holds an Australian Financial Services License (AFSL ) under the Corporations Act 2001 (Cwlth) and a RSE Licence under the Superannuation Industry (Supervision) Act 1993 (Cwlth). Under its AFSL, VicSuper is licensed to deal in, and provide financial product advice on superannuation products. At present, VicSuper representatives are limited to providing financial product advice on VicSuper products; ESSSuper - Revised, New, SERB and Transport Schemes; providing advice on whether a member should consolidate or roll over their superannuation holdings (excluding personal advice on self-managed superannuation funds) into VicSuper; and general superannuation matters. If you require personal advice that is beyond the scope of advice permitted under VicSuper s AFSL, a VicSuper financial planner may be able to provide this advice to you on behalf of (or as a representative of) a third party AFSL holder for an additional fee. VicSuper will not assume any responsibility or liability for this advice VicSuper Pty Ltd. All rights reserved. No part of this Employer application guide, covered by copyright, may be reproduced or copied in any form or by any means without the written permission of VicSuper Pty Ltd. Registered to BPAY Pty Ltd. ABN Printed on an environmentally responsible and carbon neutral paper. All information in this guide applies to 2017/18 and is correct at the time of print. II

3 Contents A. Employer obligations 1 Choice of Fund 1 Superannuation Guarantee (SG) 3 Superannuation Guarantee rate increases 4 Quarterly SG payment dates 5 Payslip reporting requirements 6 Single Touch Payroll (STP) - payroll and 7 super reporting B. Superannuation: the basics 8 Types of superannuation contributions 8 Government co-contribution 9 Contribution caps 10 Concessional (before-tax) contributions 11 Non-concessional (after-tax) contributions cap 12 Tax on superannuation 13 Marginal tax rates 14 C. Contributing to VicSuper 15 Employer super resource guide 2017/18

4 A. Employer obligations Choice of Fund Where employers are required to provide their employees a choice of superannuation fund, a standard choice form is to be provided within 28 days of the employee commencing employment. MySuper and the employer default fund All employers are required to have a default fund which must offer an APRA approved MySuper product such as the Growth (MySuper) option through VicSuper FutureSaver. Employers should make payments to the nominated default fund until such time as the employee makes a choice, if ever. New employees will need to complete the latest choice form in order for their contributions to be paid to their choice of fund. Incomplete forms should not be accepted and will need to be returned to the employee for completion. The latest Choice of Fund form can be downloaded from the VicSuper website for default employers or the ATO website for all other employers. Alternatively, you can request a copy from your account consultant or by calling

5 Standard choice form details for VicSuper Fund name: VicSuper Account name: VicSuper FutureSaver Unique superannuation identifier (USI): ABN: Phone number: Member number: Employees can refer to their VicSuper Benefit Statement, welcome letter or call our Member Centre. VicSuper banking details: BSB: Account number: Account name: VicSuper Pty Ltd If your employees have questions about choice of fund, they can visit vicsuper.com.au or call our Member Centre on Making EFT and Direct Debit payments to match your electronic data: VicSuper supports all current payment methods such as Direct Debit, EFT and BPAY. Employers wishing to use EFT and BPAY should contact VicSuper for appropriate reference details prior to commencement. Direct Debit is only available via EmployersOnline. Please note under SuperStream regulations, only electronic payments can be accepted. Employer super resource guide 2017/18 2

6 A. Employer obligations Superannuation Guarantee (SG) You must use Ordinary Time Earnings (OTE) to calculate SG contributions for your employees. This is irrespective of any awards that your employees are employed under that may have a different earnings base. Calculate SG with this formula: SG contribution = OTE x SG contribution rate (9.5%) OTE is the total of your employee s earnings in respect of: ordinary hours of work over-award payments, shift loading, commissions and bonuses payments for leave taken. OTE does not include any payments relating to overtime, payments for leave upon termination, reimbursement of expenses or leave loading. You are also not required to pay SG on parental and eligible community service leave (such as jury service). The maximum contribution base in 2017/18 is $52,760 per quarter. However, you can make super contributions above 9.5% of this amount if you wish. For more information on OTE, visit the ATO s law website at law.ato.gov.au and enter SGR 2009/2 in the search box. Alternatively, please contact your account consultant. Exclusions for SG contributions There are occasions when you are not required to pay SG for your employees. The most common examples are if your employee is: paid less than $450 per calendar month under age 18 and working 30 hours or less per week. 3

7 Superannuation Guarantee rate increases Under Government legislation the SG rate will remain at 9.5%, increasing to 10% from July 2021, and eventually to 12% from July Financial year SG rate % 2017/18 9.5% 2018/19 9.5% 2019/20 9.5% 2020/21 9.5% 2021/ % 2022/ % 2023/ % 2024/ % 2025/26 and onwards 12.0% Employer super resource guide 2017/18 4

8 A. Employer obligations Quarterly SG contribution payment dates SG contributions are required to be paid to a complying super fund at least every quarter. If the cut-off date for payment falls on a weekend or public holiday, the ATO grants a concession to make the payment by the next business day. If you miss a quarterly cut-off, please contact your account consultant to obtain more information. SG quarter Cut-off date for payment of SG Actual date SG payment required* 1 July 30 September 28 October* 30 October 1 October 31 December 28 January* 29 January 1 January 31 March 28 April* 30 April 1 April 30 June 28 July* 30 July Note: Contributions received by VicSuper after 30 June will not be shown on your employee s Benefit Statement for that financial year. * Due to the 28th falling on a weekend, the cut off date becomes the following Monday. 5

9 Payslip reporting requirements Commonwealth workplace relations legislation requires employers to add certain information on payslips when making super contributions. This includes: the amount and types of contribution you have made or are liable to make to the super fund during the pay period, and the name and the number of the super fund. Example If ABC Pty Ltd pays employees fortnightly and SG quarterly, they are required to report SG on employee payslips four times each year. ABC Pty Ltd may choose to report the accrued amount each fortnight, but must do so at least quarterly. Please note that reporting does not apply to contributions to defined benefit schemes. You must issue a payslip (either electronically or in hardcopy) within one day of the payment of wages. For further information about reporting requirements on payslips, please visit the Fair Work Ombudsman website at fairwork.gov.au Employer super resource guide 2017/18 6

10 A. Employer obligations Single Touch Payroll (STP) - payroll and super reporting Single Touch Payroll (STP) is a Government initiative enabling employers to automatically report payroll and super information to the Australian Taxation Office (ATO) at the same time as they pay their employees. The intent is to simplify tax and super reporting as employers can use their existing accounting software packages. When complete, STP will enable employers to: report an employee s salary and wage amounts (including ordinary time earnings) and PAYG withholding amounts to the ATO at the same time as paying employees report employees superannuation contribution information to the ATO when making payments to the fund introduce some flexibility around the payment of PAYG withholding automatically see a new starter s Choice of Fund if this has been pre-lodged with the ATO. NB: This will not change the way employers pay their superannuation. Key dates Employers with 20 employees or more will be able to report to the ATO through STP from 1 July 2017 and must transition fully by 1 July Employers with 19 employees or less will be able to report to the ATO through STP from 1 July However, it s not a requirement at this stage and a compliance deadline has not been set. 7

11 B. Superannuation: the basics Types of superannuation contributions Your employees can make or receive any of the contributions listed in this table (caps apply, see page 10). If you have employees who are ESSSuper members, they can join VicSuper FutureSaver to make salary sacrifice and personal contributions in addition to defined benefit employer contributions that you pay into ESSSuper. Employer contributions (called concessional contributions ) These contributions are calculated on your employee s before-tax salary Type of contribution Description Maximum age that employee can receive contributions Superannuation guarantee (SG) Additional employer contributions Currently 9.5% of Ordinary Time Earnings (OTE). See page 3 for details Contributions above the SG rate (per award or agreement) Salary sacrifice Contributions in addition to SG by agreement with your employee Age 75* * Employees age 65 and over must satisfy the work test, ie be gainfully employed for at least 40 hours over a consecutive period of no more than 30 days during the financial year in which the contributions are made. Employees who choose to make additional contributions may do so until Employer age 75. super Final contributions resource guide must 2017/18 be received by VicSuper within 28 days from the end of the month in which your employee turns age N/A Age 75* unless higher age limit is stipulated in award or agreement Employee contributions (called non-concessional contributions ) These contributions are paid from your employee s after-tax salary Personal contributions Additional regular or once-off payments Age 75* Eligible spouse contributions Paid by a member s spouse on their behalf; cannot be made through payroll Age 70* for the receiving spouse

12 B. Superannuation: the basics Government co-contribution Employees who make after-tax personal contributions into their super account may be eligible for a Government co-contribution of up to $500 pa. To be eligible for the Government co-contribution for the 2017/18 financial year, they need to: earn less than $51,813 pa (assessable income including reportable employer super contributions such as salary sacrifice, plus reportable fringe benefits) make a personal contribution between 1 July 2017 and 30 June 2018 earn at least 10% of their gross total income from operating a business or as an employee or both not be the holder of a temporary visa at any time during the financial year (unless they are a New Zealand citizen) be less than age 71 at the end of the financial year lodge an income tax return for the financial year. In addition, members need to; have a total superannuation balance of less than $1.6m at 30 June 2017 not exceed the non-concessional (after-tax) contributions cap in the 2017/18 financial year. The maximum co-contribution reduces for every dollar of income over $36,813 pa, phasing out completely if their total income exceeds $51,813 pa. The ATO will match information from your employees tax returns with information provided by VicSuper to determine eligibility. If eligible, the co-contribution will be paid into your employees super accounts during the 2018/19 financial year (usually from December) and will be preserved until they meet a condition of release. You can download a detailed Boost your super booklet from vicsuper.com.au/publications, or call our Member Centre on to request a copy. 9

13 Contribution caps Contributions made into super on behalf of employees under age 75* are 100% tax deductible to employers (except for SG payments made after the quarterly cut-off dates). This table summarises the contribution caps which apply to concessional (also known as before-tax) and non-concessional (also known as after-tax) contributions. These caps have taxation implications for super fund members (ie your employees) based on the date the contribution was received by the fund. Employer contributions (called concessional contributions ) Employee contributions (called after-tax contributions ) Types of contributions 2017/18 contribution caps Superannuation guarantee (SG) Additional employer contributions Salary sacrifice SG paid to the ATO Personal contributions Eligible spouse contributions $25,000 pa $100,000 pa or if employee is under age 65, $300,000 over three years^ Others Rollovers Not counted towards Government co-contribution Low income super contribution/ tax offset the contribution caps ^ Subject to conditions and transitional rules * Contributions made into super on behalf of employees age 75 and over are deductible to the extent the contribution is mandated under SG legislation or an award or agreement. Employer super resource guide 2017/18 10

14 B. Superannuation: the basics Concessional contributions Concessional (often called before-tax) contributions generally include SG contributions, any salary sacrifice contributions and personal deductible contributions. The annual before-tax contributions cap applies across all super accounts your employees may have. These contributions are taxed at a low rate of 15%, however for individuals who have an adjusted income of $250,000 or over, these are taxed at 30%. Any before-tax contributions over the cap are taxed at your employee s marginal rate plus an interest charge. SG and salary sacrifice contributions received from multiple employers will count towards the annual before-tax contributions cap, as will any bonus payments that your employees may decide to salary sacrifice. Before-tax contributions and notional employer contributions to defined benefit funds such as some ESSSuper schemes will also count towards the before-tax contributions cap. From 1 July the eligibility rules for individuals to deduct personal super contributions has broadened and may be available to many employees. This would need to be factored into any salary sacrifice considerations as the before-tax contributions cap will apply to both types. Please note that special rules may apply to defined benefit employees. If a super fund does not have your employee s TFN, before-tax contributions will generally be taxed at the top marginal tax rate plus Medicare levy. 11

15 Non-concessional contributions cap The non-concessional (often called after-tax) contributions cap includes after-tax contributions made through payroll. Employees under age 65 and with a total super balance of under $1.6 million at 30 June of the prior year, can bring forward two years of entitlements, equalling a cap of $300,000 over three years as shown in the example. This is subject to transitional arrangements. If your employee does contribute more, they have 2 options. The excess could remain in super where it will be taxed at their top marginal rate plus the Medicare Levy. Or they may elect to refund the excess and any investment earnings. The earnings will be taxed at their marginal rate and an offset will apply. The employee s TFN must be provided for a super fund to accept after-tax contributions. Example John is age 42 and recently inherited $600,000 and has a total superannuation balance of $850,000 at 30 June Using his inheritance, John makes a single after-tax contribution of $300,000 into super during the 2017/18 financial year, using the 3 year bring-forward rule. With no non-concessional contributions in the previous two years, this takes John up to his non-concessional cap of $300,000 during the 2017/2018 financial year. John therefore cannot make another after-tax contribution into super until 1 July 2020 without incurring additional tax. Employer super resource guide 2017/18 12

16 B. Superannuation: the basics Tax on superannuation Tax on entry and investment earnings When contributing into super, employer contributions are taxed at a low rate of 15%. Individuals with an adjusted income over $250,000 pa generally have their employer contributions taxed at an effective rate of 30%. These include SG, additional employer and salary sacrifice contributions. Employee contributions (or non-concessional contributions ) are tax-free. Investment returns in super are only taxed up to a maximum of 15%. Additional tax may apply if your employee s TFN is not provided. You are required by legislation to pass on your employee s TFN to their super fund. Tax on withdrawals Withdrawals from super are tax-free from age 60. The taxable component of withdrawals made before age 60 may be subject to tax. Tax components Tax treatment 2017/18 Tax-free component Taxable component Under preservation age Preservation age to 59 up to $200,000 above $200,000 Age 60 and over No tax payable 20% plus Medicare levy No tax payable 15% plus Medicare levy No tax payable (provided the lump sum is withdrawn from a taxed fund such as VicSuper Fund) 13

17 Marginal tax rates This table shows the individual marginal rate thresholds and tax rates for the 2017/18 financial year. Income level Marginal tax rate $18,200 and below Nil Nil Tax payable $18,201 to $37,000 19% 19c for each $1 over $18,200 $37,001 to $87, % $3,572 plus 32.5 for each $1 over $37,000 $87,001 to $180,000 37% $19, for each $1 over $87,000 $180,001 and over 45% $54, for each $1 over $180,000 Note: Medicare levy of 2% is generally payable in addition to the rates above. Employer super resource guide 2017/18 14

18 C. Contributing to VicSuper VicSuper accepts all contribution types you may make on behalf of your employees. Contributions can be paid by: user-initiated direct debit * BPAY for employers * Electronic Funds Transfer (EFT). Note: VicSuper s preferred payment method is direct debit. In accordance with the SuperStream data standards, all employer super contributions must be submitted electronically. VicSuper offers employers an online solution to facilitate electronic contribution payments EmployersOnline. For more details see page 16 of this guide or contact VicSuper on The ATO may impose penalties for non-compliance. * Only available to employers using VicSuper EmployersOnline. 15

19 VicSuper EmployersOnline VicSuper EmployersOnline has a range of capabilities available to make super easier for your business including: view previously submitted contributions files maintain your user name and password details complete and submit your contribution payments electronically (including via file upload) choose the payment method and pay period that suits you register new employees advise us of employees who are no longer working with you check and edit details for existing employees check contributions you have paid for your employees provide your employees tax file numbers. Employer super resource guide 2017/18 16

20 Contact your account consultant Browse our website vicsuper.com.au Call our Member Centre and speak to a VicSuper superannuation consultant Write to us VicSuper GPO Box 89 Melbourne VIC 3001 Advice centres Bendigo Blackburn Geelong Melbourne Traralgon Monday to Friday 8.30am to 5pm SuperRatings, Chant West and Heron Partnership are independent organisations. Platinum is SuperRating s highest rating, 5 apples is Chant West s highest rating and 5 stars is Heron Partnership s highest rating. For details on ratings, criteria and methodologies see superratings.com.au, chantwest. com.au and heronpartners.com.au. The Conexus Financial Superannuation Awards are determined using proprietary methodologies. Awards were issued March 9, 2017 and are solely statements of opinion and do not represent recommen-dations to purchase, hold, or sell any securities or make any other investment decisions. Ratings are subject to change. V909 10/17