Chapter 4: Superannuation Guarantee Levy

Transcription

1 Chapter 3: Superannuation Guarantee Levy Chapter 4: Superannuation Guarantee Levy 1. he Superannuation Guarantee Scheme was introduced by the Federal Government on 1st July 1992, requiring all employers to make minimum contributions (a set percentage of payroll) to a complying superannuation fund for each employee. he Scheme was legislated with the introduction of the Superannuation Guarantee (Administration) Act 1992 and the Superannuation Guarantee Charge Act he purpose of the levy is to create forced savings and in the long term reduce the welfare payments made by the Federal Government in the form of old age pension. he median age of the Australian population has been increasing over the last decade. he Superannuation Guarantee Scheme is seen as a way of coping with the shortfall of social welfare that the Federal Government predicts for the future. 2. Have some control over your employees; Are responsible for the payment of wages or salary; or Have the power to dismiss or hire employees. 3. here are a number of ways to determine an employee s earnings base, depending on whether the employee s superannuation is based on: An industrial award. An employee agreement. he superannuation fund s trust deed. 4. Employees aged 70 and over. Non-residential employees paid for work outside Australia. Employees earning less than $450 per month. People who work less than 30 hours per week and the work is of a private/domestic nature. Employees who are under the age of 18, working 30 hours or less per week. Non-residential executives who are temporarily in Australia and hold a Class 2 entry permit code 413. Resident employees paid by non-resident employers for work outside Australia. Local government councillors. 27

2 Process Business ax Solutions 5. he maximum contribution base is the maximum salary on which employers must pay superannuation guarantee for each employee. he current maximum earnings base is $45,750 per quarter, i.e. $183,000 per year. he maximum contribution into an employee s superannuation fund is 183,000 x 9% = $16, Under super choice rules, some employee s will be eligible to choose the fund for their future 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. they are in a particular type of 'defined benefit fund or have already reached a certain level of benefit in that fund. See text for additional information for each state. 7. A Choice Fund is one where certain employers are required to offer their employees the option of choosing the superannuation fund into which their superannuation contributions must be paid. he employee can choose a fund different to what the employer prefers. 8. here are no reporting requirements for employers unless they are covered under Australian workplace legislation and award agreements that require employers to report superannuation contributions on payslips. Under these circumstances they are also obligated to report to employees the name of the fund and the amount of contribution. 9. ( a ) 10. ( b ) 11. ( d ) 12. ( a ) 13. ( c ) 14. he General Interest Charge (GIC) is a charge imposed if employers do not pay the superannuation guarantee charge by the due date. he rate for the quarter January to March 2013 (time of publication) is 10.24%. 28

3 Chapter 3: Superannuation Guarantee Levy 15. When an employer makes a contribution for an employee that does not comply with the choice of fund rules, the employer s quarterly shortfall may be increased by 25% of the shortfall that would apply if the contribution not been paid. Employee s choice liability = 25% x (notional quarterly shortfall employee s SG shortfall) 16. Superannuation Guarantee Penalties are: Superannuation Guarantee Charge - No tax deduction General Interest Charge - ax deductible Shortfall penalties - No tax deduction Administrative penalties - No tax deduction 17. ( a ) An employer who fails to comply with the rules, must pay a superannuation guarantee charge comprising: the shortfall of contributions that should have been made. an administration fee ($20 employee affected). interest charged on the shortfall of 10%pa. ( b ) here is no specific record-keeping system prescribed but adequate records must be maintained and retained for at least five years. he records must indicate: he annual base national payroll for one year. he total contributions made for each employee. Calculations if a superannuation guarantee charge was, or must be, paid. Employers should keep detailed records of how the amounts were calculated, which funds it was paid into and the date of payments in case the employees or AO has any queries. 29

4 Process Business ax Solutions 18. ( a ) otal superannuation liability = $620,000 x 9% = $ 55,800 ( b ) Employee s entitlement = $39,000 x 9% = $ 3,510 ( c ) ( a ) Shortfall Component = $3,000 ( b ) Interest Component 3,000 x *149 days x 10% = days * 1 st April 28 th August = 149 days ( c ) Administration Component = 20 3, ( d ) Part 7 Penalty 200% x $3, , Superannuation Guarantee Charge = ( a ) + ( b ) + ( c ) + ( d ) $9, Super Match is a new initiative offered to superannuation funds and organisations by the AO to locate lost member superannuation. here are currently about 6.4 million accounts on the Lost Member Register (LMR) with an approximate value of $12.9 billion. he benefits of Super Match are: Reuniting members with lost, inactive and member protected accounts. Simplifying the process of locating monies. Promoting member loyalty by providing a new service. 20. A complying fund is one that has elected to be regulated under the Superannuation Industry (Supervision) Act hese funds qualify for concessional tax rates. Search for SIS Act. e.g. AMP Superannuation Fund, ING Masterfund, First State Superannuation Fund. 21. From the AO website, download form NA13080 and complete using your personal details ( c ) 2 ( e ) 3 ( a ) 4 ( d ) 5 ( b ) 6 ( f ) 30

5 Chapter 3: Superannuation Guarantee Levy 23. RUE FALSE a. Average weekly ordinary time earnings (AWOE) is used for an employee with no earnings base. F b. he superannuation guarantee charge uses actual earnings to calculate the charge. c. Superannuation does not have to be provided for an employee who earns less than $450 per month. d. Super match is used to locate lost funds for its members. e. he superannuation guarantee scheme is compulsory for all employers. f. Superannuation funds receive concessional tax treatment. g. An employee s earnings base is used to calculate the contributions. h. he current rate on contributions is 10%. F i. he superannuation guarantee charge consists of a shortfall component and an interest component only. F j. As a result of new rules most employees are not able to choose their own fund. F 24. otal Annual Earnings Base is: $361,000 less (28, , , ,000) = $ 297,000 Minimum Superannuation Contribution = 297,000 x 9.0% = $ 26,730 Amount Payable = 26,730 22,950 = $ 3,780 Shortfall ony 450 Robert 180 Marcel 100 Joe 580 Anne 240 Marnie 40 Karen 660 Chiara 1,530 $3,780 31

6 Process Business ax Solutions 25. ( a ) SG contribution made ($3,360/56,000) x 100/1 = 6% 6% x 56,000 = 3,360 ( b ) Shortfall percentage and shortfall 9% - 6% = 3% Shortfall ($84,000 x 3%) 2, ( c ) Nominal Interest Component 2,520 x 150 days x 10% = days * Interest is calculated from 1 st October to 28 th February less 1 day. # assuming a normal 365 day year. ( d ) Administration Component Employee fee 3 x = ( e ) Superannuation Guarantee Charge = ( b ) + ( c ) + ( d ) = 2, ( a ) SG contribution made 3% x 85,000 = 2,550 ( b ) Shortfall percentage and shortfall 9% - 3% = 6% Shortfall ($110,000 x 6%) 6, ( c ) Nominal Interest Component 6,600 x 147 days x 10% = days * Interest is calculated from 1 st January to 28 th May less 1 day. # assuming a normal 365 day year. ( d ) Administration Component Employee fee 5 x = ( e ) Superannuation Guarantee Charge = ( b ) + ( c ) + ( d ) = $6,

7 Chapter 3: Superannuation Guarantee Levy ,000 30,000 1, % 1.8% 7.2% 30,000 2, % 30, , ,170 33

8 Process Business ax Solutions 28. Superannuation Guarantee Offset for Late Payment 1,170 1, , , , , ,000 1,000 34