Paying super is an important part of being an employer.
At this time of year it is always a good time to review how you are going with your superannuation obligations, and if you find that you have fallen behind we can help you get back on track.
It’s important that businesses employing staff understand that super provides income for their workers in retirement – it is not another tax nor is it government revenue.
1. Do you know that super contributions are tax deductible if you meet the SG requirements?
- A tax deduction can be claimed for super payments made to an employee’s superannuation fund in the financial year they are paid. If the payment due on 28 July isn’t made by 30 June, the deduction can’t be claimed until the next financial year.
- Super contributions are considered paid when they are received by the super fund.
2. Are you paying super for all of your eligible workers?
- Generally, if you pay an employee $450 or more before tax in a calendar month they are eligible for SG.
- There are special conditions for contract workers and employees under 18.
- Some contractors, even if they have their own ABN, may still be eligible for super payments.
- Company directors who receive payments in their capacity as a director are eligible for SG contributions as the company is their employer for SG purposes.
3. Are you paying a minimum of 9.5% of SG to your eligible employees?
- SG is paid on ordinary time earnings (OTE). OTE is generally what employees earn for their ordinary hours of work. It includes things like commissions, shift loadings and allowances, but not overtime payments.
- Some awards have a higher rate and different conditions, so it is important to check this. However, if an award stipulates a rate of super less than 9.5% you must still meet the minimum 9.5% of OTE requirement.
4. Check that you are paying on time?
- You must make payments at least four times a year. For most funds the deadlines are quarterly – 28 July, 28 October, 28 January and 28 April. However, some funds require monthly payments, so it is important to check with each fund.
- You could still consider paying more frequently, for instance as part of the payroll cycle. Making more regular payments may make it easier to meet your obligations and manage your cash flow.
5. Are you paying super to the right place?
- Do you know that your employees have the option of choosing their own super fund (rather than going with your default fund)?
- Most employees are eligible to choose the super fund that their SG is paid into. Check their award and provide each eligible employee with a super choice form.
- If you haven’t received an employee’s completed choice form and the SG contribution is due, you must make the payment to your default fund by the due date.
- Offer your employees a choice – using the standard choice of fund form
6. Are you paying super and reporting in the right way – using SuperStream
- All businesses should now be SuperStream compliant.
- Payment methods must meet the SuperStream requirements to pay electronically (electronic funds transfer or BPAY®) and send the related data electronically.
- The Small Business Super Clearing House is a free service for businesses with 19 or fewer employees. You make SG contributions as a single electronic payment and the clearing housedistributes the payments to your employees’ super funds.
7. Ensure you are keeping records
- You must keep records for 5 years showing how much SG you paid and how it was calculated. Records must also show you offered each employee a choice of super fund.
8. Have you found that you have made a mistake in meeting your super obligations?
- The ATO offer and support to employers that want to do the right thing and willingly participate in the system. If a mistake is made, it is best to make contact with the ATO as soon as possible to discuss your situation.
- Employers that are continually failing to comply and/or are deliberately doing the wrong thing may be subject to penalties. The penalties are increasing from 1 July 2017.
We have found that many employers have benefited from moving to a cloud-based system, Xero includes a full payroll system which makes superannuation and wage reporting a very streamlined process.