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Superannuation Guarantee Charge– Insights from ND Accounting
Why was the superannuation guarantee set up?
The establishment of compulsory superannuation was a direct result of the financial challenges being faced by an expanding aging population. The scheme was introduced on the 1st of July 1992, forcing all workers to save for retirement relieving the pressure on Australia’s age pension.
Exemptions include employees under the age of 18, those working less than 30 hours a week and those with pay totalling less than $450 per month.
How much are the contributions to Superannuation?
Since the introduction of the Superannuation guarantee governments on both sides have introduced significant changes to the system. Employees can now choose the fund they’d like to manage their superannuation savings and even set up a self-managed fund.
The Employer Super Guarantee is currently at 9.5 per cent. This rate is expected it increase to 10 per cent as at 1st July 2021.
When do the contributions need to be paid?
Contributions to superannuation funds are made every three months, by employers on behalf of their employees. Contributions must be made by the 28th day following the end of each quarter (that is, by 28 October, 28 January, 28 April and 28 July).
How are contributions made to Superannuation?
Under SuperStream, employers are required to make super contributions electronically in a standard format.
This can be done, by using your current accounting/payroll system (if you are subscribed for payroll features), such as MYOB, Xero, QuickBooks and other packages.
Other ways to make super contributions electronically, is by registering with the Australian Taxation Offices, Small Business Superannuation Clearing House, or registering with an existing super fund applicable to your industry, such as REST for retail owners, and have them act on behalf of your business, as your clearing house.
Find out more about SuperStream here
What is the Superannuation guarantee charge?
The Superannuation Guarantee Charge (SGC) scheme requires employers to pay a set, minimum amount of superannuation each quarter for each employee. If an employer doesn’t pay the minimum amount, the employer is liable to pay the SGC (simular to a tax). Contributions must be paid to a complying super fund or retirement savings account (RSA) or ATO. (Speak to Natasha at ND accounting regarding “complying” funds.)
How much is the superannuation guarantee charge?
If an employer misses a payment of the minimum superannuation contribution required for a quarter they will be liable to pay a Superannuation guarantee charge to the tax office. The calculation includes the amount of the contribution the employer has underpaid, interest on that underpayment (10% from the beginning of the quarter) and an administration charge ($20 per employee, per quarter). Further penalties will apply if the statement and payment do not reach the ATO by the due date.
Information provided on this site is for general guidance only. For personalised accounting, taxation and booking advice and assistance contact Natasha at ND accounting, Warrawong.