If you employ or contract workers into your business on a full, part time or casual basis you may have superannuation and tax obligations. If you are about to engage workers into your business, it is important to understand your superannuation obligations, and to provide your employees with the necessary superannuation arrangements. The ability to lodge a superannuation claim early upon disability, or later upon retirement is an important right for all employees. It is therefore vital that their contributions have been calculated and paid correctly.
Do I have to pay superannuation?
If you employ a person under a written or verbal contract on a full-time, part-time or casual basis you are an employer for super guarantee purposes and must meet your superannuation obligations. To meet your superannuation obligations you need to:
- work out whether your worker is eligible for the superannuation guarantee
Generally, your employees will be eligible they’re 18 years old or over and you pay them $450 or more (before tax) in salary or wages in a month.
- nominate a default super fund
- offer a choice of fund to your employees
- pass on the tax file number of each of your employees to their super fund
- work out how much to pay and which account to pay into
- pay the super contribution on time and at least quarterly
- pay at least the minimum 9.50% contribution amount
- keep records of super contribution payments and what choice of super fund has been offered to eligible employees.
Superannuation contributions and fund choices
All employers are required to offer their employees a choice of super fund. Upon commencement of employment, you have an obligation towards your employee’s to:
- identify them as a superguarantee eligible employee
- provide a Standard choice form to the eligible employee
- act on your employee’s choice of super fund, not your standard nominated fund if they have chosen otherwisePayment obligations As an employer you have an obligation to pay your super contributions quarterly. The payment due dates for super contributions each year are:
- 28 January
- 28 April
- 28 July
- 28 OctoberIf you don’t make your superannuation contributions by these cut off dates, you’ll face penalties or will need to lodge a statement to the Taxation Office.Rules to rememberSome important general rules to remember in order to ensure you meet your employer super obligations include:
1. Calculate income correctly
Super contributions are based on an employee’s income, it is therefore vital that their income is calculated correctly. Contributions are set as a percentage (minimum 9.50%) of regular ‘ordinary time earnings’; this includes the employee’s regular wage plus commissions, paid leave and other allowances. As there are a number of factors which are either included or excluded from ordinary time earnings, it is important to review your contributions to ensure that your employees income has been calculated correctly.2. Submit Tax File Numbers
All employers must pass their employees’ tax file numbers on to their super fund for authorised purposes. You need to do this no later than: - The day on which you make the first super contribution for that employee
- Within 14 days of receiving their tax file number.3. Keep records
You are obligated to keep record which: - detail whether employees have or have not been offered a choice of fund
- confirm that your company’s default fund is compliant
- prove that superannuation contributions have been made to employee’s chosen funds or the default fund.
- These records should be kept for at least five years to show that all employer super obligations have been met.
- The superannuation savings of your valued employees will ensure that they may enjoy a regular income later in life when they retire. It is therefore important to fully understand your employer super obligations, and to ensure that you meet these important obligations.Bio: Laura Costello is in her third year of a Bachelor of Law/International Relations at Latrobe University. She is passionate about the law, the power of social media, and the ability to translate her knowledge of both common and complex legal topics to readers across a variety of mediums in a way that is easy to understand.
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