Employer superannuation obligations - when was the last time you checked your practice was complying?

With all the rules surrounding employer superannuation obligations, it can be easy to overlook your obligations or changes when they occur.

Take a moment to consider the following and whether your practice is complying.

The Super Guarantee (SG) is a compulsory contribution made by all employers on behalf of each of their eligible employees. Because Super Guarantee contributions are based on an employee’s income, their income must be calculated correctly.

Contributions are set as a percentage of regular Ordinary Time Earnings. It generally includes things like leave (annual, personal, long service), some shift loadings, certain allowances, back pay, commissions and bonuses.

Your payroll system should calculate your obligation for employee superannuation, however it is your obligation as an employer to ensure your Practice has correctly applied superannuation to pay categories within your software. The impact of an error at setup can lead to errors over a significant period of time which will be costly to your practice.

Superannuation Guarantee Rate – why does it keep changing?

Minimum Super Guarantee (SG) contributions increased from 9.5% to 10% from 1 July 2021, with another 0.5% increase to 10.5% from 1 July 2022. Annual increases have been legislated at 0.5% annually until the rate is 12% from 1 July 2025.

When must contributions be paid?

Employers must pay their employees’ super, at a minimum, at least four times a year. Payments must be made on time to avoid Super Guarantee Charge (SGC). Due dates for quarterly payments are:

• 1 July to 30 September – payment due by 28 October
• 1 October to 31 December – payment due by 28 January
• 1 January to 31 March – payment due by 28 April
• 1 April to 30 June – payment due by 28 July
  
  

Where payments are made late or to an incorrect fund, you must lodge the SGC statement and pay the SGC to the ATO. Penalties and charges will apply.

Contributions Caps and Maximum Super Contribution Base

Contribution caps are the limits to annual superannuation contributions. There are two types of caps:

• a maximum before-tax contribution limit (concessional contributions), and
• a limit on after-tax contributions (non-concessional contributions)
  
  

Before-tax contributions include employer contributions and salary sacrifice.

For the 2022 Financial Year contributions caps are:

• $27,500 for concessional contributions (including employer contributions)
• $110,000 for non-concessional contributions

It’s the employees' / members’ responsibility to keep a check on their contribution caps.

For employers, each year, the Federal Government sets a maximum limit on an employee’s income on which you need to pay Superannuation Guarantee (SG) contributions, called the maximum superannuation contribution base.

The limit is indexed to AWOTE (Average Weekly Ordinary Time Earnings), and changes every financial year.

For the 2022 Financial Year, the maximum superannuation contribution base is $58,920 per quarter. So, if an employee’s earnings exceed $58,920 for the quarter, you do not need to pay SG contributions on their earnings above this limit (however may choose to).

Do you have a new employee?

When a new employee joins your Practice, within 28 days you must offer them a superannuation standard choice form. This choice form must include details of your nominated default super fund. Employees may elect to nominate their preferred superannuation fund and provide the details to you for future payments.

From 1 November 2021, you need to take an extra step if your employee does not choose a superannuation fund. Employers must use the ATO database to check if the employee has a stapled fund. A stapled super fund is an existing super account which is linked, or 'stapled', to an individual employee so that it follows them as they change jobs.

If an employee does not specify a preferred super fund, then you must pay their superannuation into your default fund if the employee does not already have a stapled super fund.

Super guarantee changes for those under 18

Currently, you’re entitled to super guarantee contributions from an employer if you are 18 years old or over and paid gross wages of $450 per month. If you are under 18 years of age, you must earn at least $450 per month and work more than 30 hours in a week to be entitled to super guarantee contributions.

This has been in effect since 1992 and is changing. From 1 July 2022, eligible employees who earn less than $450 per month will be paid super guarantee by their employer if they satisfy the other eligibility requirements.

Need help to navigate this complex area, please contact our office to speak to one of our Advisors from our Specialist Medical Services team.