A Fair Go
All employers will be affected by two fairly recent changes to the superannuation guarantee law…
As of July 1, 2008, all employers were obliged to use ‘ordinary time earnings’ (see below) as the earnings base for the purpose of calculating employee superannuation guarantee contributions. This is a significant change because prior to this date some employers were using a different earnings base contained in an industrial award, or an existing agreement that was entered into with the employee.
The purpose of this change is to standardise the earnings base across all industries so that no employees are disadvantaged. Another important and long awaited change will remove a unfair burden placed on employers who pay their superannuation guarantee contributions after the due date. Employers in this situation were previously required to pay the contributions a second time to the ATO, together with interest and penalties in the form of the superannuation guarantee charge.
A bill was introduced into parliament to allow a late payment of superannuation guarantee contributions to be applied against the superannuation guarantee charge, thereby removing this double contributions burden. The late contribution is not tax deductible and the employer will still need to lodge a superannuation guarantee statement with the ATO, incurring interest and penalties along the way. The best strategy for employers is to pay the superannuation guarantee contributions on time so that the payment is tax deductible. This also relieves the employer of the additional burden of having to complete and lodge a superannuation guarantee statement with the ATO.
Joe Kaleb is a chartered accountant and registered tax agent, who holds a master of taxation and is CEO of www.australianbiz.com.au. The website provides practical tax and business articles, KPI and finance calculators, templates, business insurance, commercial, factoring, car & equipment finance, and other tools to assist business owners and financial decision makers to better manage their business and income tax obligations. Joe also runs an accounting practice in Sydney that specialises in taxation and advisory services to high net worth professionals and small to medium sized businesses.