Employer Super Contributions

1. SGC Employer Contribution
2. Minimum and Maximum Employer SGC contributions
3. Can my employer pay more than SGC 9%
4. Employer contributions through Super Salary Packaging
5. When doesn’t My Employer have to pay me Super
6. Can my employer contribute shares to my super instead of cash?
7. My spouse is a director, can I pay them super?
8. At what point in time are the contributions considered made for tax purposes.
9. SGC shortfall Employer originated amounts (under paid SGC by our employer)
10. Employer contributions under an award
11. Employer salary sacrifice & above SGC contributions

SGC Employer Concessional Contribution

Employers must pay into your super fund SMSF the minimum support governed by the Superannuation Guarantee Charge Act, the amount currently is 9% SGC (see rates for updates) of your ordinary time earnings, often your gross salary, but can include bonuses and other entitlements. Employer Contributions are generally concessional on the basis the employer is receiving a tax deduction.  

Minimum and Maximum Employer SGC contributions

Minimum – The employer must pay a minimum of SGC% (9% in 2013 – see rates for updates) based on your ordinary times earnings (basically your wages) up to the cap amount provided your wage is less than than the cap ($175,280 in 2012 – see rates for updates) .

Maximum – Your employer does not need to pay SGC% (9.5% in 2013 – see rates for updates) above the ordinary times earnings cap (2010 – $175,280 ($43,820) per quarter therefore the maximum super contribution is $15,775.20 for 30.06.12).

But be warned, if the employment contract stated that 9.5% was based on the employees salary instead of simply stating SGC payable, then the employment contract may dictate a higher superannuation contribution being paid than the maximum allowed and again, excess contributions tax would be payable. Excess Contributions Tax is payable by the individual, however you can choose to withdraw the amount from your super by providing the super fund a ‘authority to release’ and then YOU pay the excess contributions tax.

Tax Warning – Doctors, Engineers and others watch out – where you have two employers you might be caught out and have to pay excess contributions tax, to find out more <click here>.

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Can my employer pay more than SGC %

Your employer can pay more than the SGC rate, currently 9% (see rates for updates).
The employer normally would do this where an employee sacrifices part of their salary to boost the super contributions. To find out the maximum amount that can be contributed to a superfund for a member including SGC <click here>.

Employer contributions through Super Salary Packaging

Employees can request their employers to change their salary package to include salary super sacrifice, meaning the employer pays the same wage to you, but more goes to your superfund and less to your bank account, and reducing your tax to the SMSF income tax rate (see rates page for updates) for the amount sacrificed in the process.

Employees can continue this strategy while they are withdrawing benefits from super pension at the same time, to read more about this see Pension Strategies click here.

When doesn’t My Employer have to pay me Super

Sometimes an Employer/Payer does not need to pay the SGC%, most common examples are:

• if you are not an employee but a contractor not principally for labour
• if you earn less than $450 in one month,
• you are under 18 and not working full time,
• are older than 70,
• work principally of a private or domestic nature for less than 30hrs per month,
• persons who opt out of 9% super with earnings between $450-$900, etc.

Can my employer contribute shares to my super instead of cash?

Yes, and in fact it can be something else too, however the trustee of the fund (you) can refuse it, for example if its not something that can be accepted…to read more on what the trustee cannot accept.

My spouse is a director, can I pay them super?

Yes, provided your spouse is paid for director duties, you can pay them super and the company can receive a tax deduction up to the maximum amount (aged based limit). This should extend to any company including a investment company holding shares.

At what point in time are the contributions considered made for tax purposes.

This is important as often super contributions are made at the mast minute arising from last minute tax planning strategies, we always recommend that tax strategies be worked out well before the end of the financial year.

In general terms in order to receive a tax deduction or contribution before the end of the financial year the superfund must receive it on or before the end of the year, the following applies to the different payment methods:

• the contribution is made by EFT – when credited to your super funds bank account,
• the contribution is made by cash or cheque – when received by the superfund and promptly deposited or presented and honored.
• if your using promissory notes to pay the contribution from a related party then when the superfund receives the promissory note, provided it is demanded promptly and the note is honored.
• Contribution by share /property / transfer is when beneficial ownership has changed not necessarily legal ownership, ie properly executed transfers, probably more than an offer and acceptance, but also including Registrable asset transfer documents such as land transfers often prepared by lawyers/settlement agents.
• Contribution by expense of SMSF but expense paid by employer sponsor – made when the cheque/EFT funds debited from the employer sponsor account.

SGC shortfall Employer originated amounts (under paid SGC by our employer)

If you determine that your employer has underpaid your super (SGC) and you notify them past the due date of when your super should have been paid (generally 28 days after the end of each quarter) then your employer must pay the super owed to you plus an interest component (shortfall) and admin fee to the Tax Office together with documentation supporting the shortfall.

The Tax office then pays this shortfall to your superfund. This contribution is not an employer contribution, although it is sourced from the employer.

Employer contributions under an award

Some superannuation contributions are payable under an award. For example we understand that an award of the public health sector payable to Westscheme, where the advantage of doctors that became members prior to a certain date can have contributions received over and above the maximum amount allowed (aged based limit). We invite any practitioners to add any further comments on this scheme and any further insights.

Employer salary sacrifice & above SGC contributions

Contributions made to by an employer which have been determined by an agreement between the employer and the employee. This arrangement normally is initiated by the employer to arrive at an improved remuneration package for an employee by reducing the tax payable by the employee thereby increasing the net cash received directly and indirectly by the employee. For more info contact us <click here>, or see what the ATO has to say <ATO-Link>.

Here’s what the ATO has to say about compulsory employer contributions <ATO-Link>.

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