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Friday, 20 June 2014

Superannuation Guarantee (SGC)

Superannuation Guarantee Contribution (SGC) is made on the Ordinary Time Earnings (OTE) of an eligible employee. OTE are part of the normal definition of “Salary & Wages” (S&W) but not entirely.

SGC rate is 9.25% for the year 1 July 2013 until 30 June 2014.

It is proposed that the rate will increase annually to a proposed 12% as of 1st July 2019.
Schedule of proposed super guarantee increases:

1 July 20149.50%
1 July 201510.00%
1 July 201610.50%
1 July 201711.00%
1 July 201811.50%
1 July 2019 12.00%

The new rate applies to the first pay and the entire amount of that pay, paid on or after the respective 1st July.
Employers must provide a SuperChoice form to employees within 28 days.

Superannuation payments are tax deductible to an employer if received by the Superfunds by the 28th of the month following each quarter.

Super Guarantee Charge is paid by employers who miss the payment date; it is not deductible and also attracts interest and penalties.

Employees Who Are Not Eligible for SGC:
  • Employees paid less than $450 in a month (Hospitality award reduces this to $350
  • Employees under 18 years working 30 hours or less per week
  • Non-resident employees for work done outside of Australia
  • Foreign executives who hold certain visas or entry permits
  • Employees paid for domestic or private work 30 hours or less per week
  • Employees who receive payments under Remote Jobs and Communities Program (formerly CDEP)
  • Members of the Army, Navy or Airforce reserves
  • Employees temporarily working in Australia, covered by bilateral super agreement.
Self Employed - sole traders or partners in a partnership are not part of the SGC system.

Super for temporary residents departing Australia
Employees with a temporary visa and working in Australia, employers must make super guarantee contributions to a fund chosen by the employee or default fund of the employers.
On departing Australia the employee can generally claim their super through DASP (Departing Australia superannuation payment). This can be claimed online or by paper before you leave Australia.

If the employee has not claimed their super after a minimum of six months after leaving Australia the super will be transferred to the ATO and held until claimed.

Not all temporary visa employees can claim DASP, these include Australian and New Zealand Citizens, Permanent Australian residents, and Retirement visa holders and Investor Retirement visa holders.

SuperChoice form
  • An employer must provide a SuperChoice form to each employee within 28 days of commencement.
  • The information required may be obtained from within other forms
  • If an employee has not returned the form within 28 days the employer must pay into the default fund.
  • An employer must adhere to the choice made within two months of receiving the form
  • The penalty for failing to provide a Choice Form to employees can be up to $500 per quarter.
Remember that you should always consult the award, enterprise agreement or other industrial instrument that governs the worker’s pay and conditions. The relevant instrument may provide for super to be paid on categories not usually considered for super.