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Employer Obligations

When providing super to your employees, there is some key super legislation you should consider:

Superannuation Guarantee (SG)

Superannuation Guarantee (SG) legislation requires employers to pay a minimum level of super for each employee at least quarterly.

The minimum level, as a percentage of each employee's average weekly ordinary time earnings is 9%. However, if your employee is covered by an Award or industrial agreement that specifies a higher amount then you are obliged to pay the higher amount.
 

SG Contribution Deadlines
 

SG Quarter	Due date for Contributions
1 July - 30 September	28 October
1 October - 31 December	28 January
1 January - 31 March	28 April
1 April - 30 June	28 July

 

You are required to:

Make SG contributions on behalf of your employees at least quarterly. Penalties apply if you do not comply.

 

You are not required to pay SG contributions for employees who are:

• Paid less than $450 (before tax) in any calendar month

• Under 18 years of age and working not more than 30 hours per week

• 70 years of age or over

• Senior foreign executives (More information call: 13 10 20)

• Non-resident employees paid for work done outside Australia.

Super Choice

Many employees are now able to choose which super fund will receive their employer SG contributions. For employees of Local Governments there are some restrictions on contributions other than the mandatory SG.

Eligible employees have choice from 1st July 2006 only for the 9% Statutory Guarantee (SG) component of employers superannuation obligation and for personal post tax contributions (also known as non-concessional contributions). Salary sacrificed contributions or employer contributions over and above the 9% SG must be paid to WA Local Government Superannuation Plan in accordance with the Local Government Act provisions and the Plan Trust Deed (for participating employers).
 

What do Employers need to do?

The first task is to establish which employees are eligible for choice. Not everyone is eligible to choose a superannuation fund - it generally depends on the type of award or industrial agreement under which employees are employed. (Please consult the Australian Tax Office (ATO) - Employer superannuation essentials)

Once employers have established who is eligible they need to provide a “Standard Choice Form” within 28 days to:

• Existing employees: To existing employees only if they ask for one in writing and only one request may be made every twelve (12) months.

• New employees: To new employees starting work from 1st July 2006 (assuming the legislation is passed).

• Other: To an employee if an employer becomes aware that they are unable to contribute to an employee’s chosen fund or that it is no longer a complying fund.

The current legislation provides for the WA Local Government Superannuation Plan (WALGSP) to be established as the default fund, so employees who don’t choose will automatically become a member of WALGSP.

The following three scenarios will attempt to explain the impact the change in regulations has in each case. Please note that some negotiated EBA's may contain provisions which overrule the scenarios below.
 

Scenario	Choice
An employer contributes 9% SG plus 5% matching contribution if the employee contributes 5%.	Choice of fund applies only to the 9% SG the other 10% must be paid to WALGSP.
The employer contributes 9% SG plus no matching component but the employee salary sacrifices 5%.	Choice of fund applies to the 9% SG but the 5% salary sacrifice becomes an employer contribution and must be paid to WALGSP.
An employer contributes 9% SG and the employee pays 5% post tax as a personal contribution i.e. there is no employer contribution.	Choice of fund applies to both the 9% SG and the 5% post tax personal contribution from the employee.

 

Remitting Contributions

Generally, anyone can make or receive contributions, as long as they meet one of the following criteria:



* Contributions may be accepted up to 28 days after the end of the month in which you reach the age 75, providing the work test has been met.

The Work test means you must have been gainfully employed for at least 40 hours over a 30 day consecutive period during the financial year the contributions were made.

Mandated employer contributions include Superannuation Guarantee contributions (up to age 70) and contributions made under an award or industrial agreement. The next section talks more about  employer contributions.
 

More Information:

Australian Tax Office - Employer superannuation essentials