Superannuation checklist - what you need to know
CareerOne Editor Kate Southam spoke to the Australian Tax Office about an employer's obligations regarding superannuation. Kate also asked what people can do if their employer fails to provide a payment summary at tax time.
What is an employer's basic obligation regarding superannuation? Does an employer have to pay the equivalent of 9 per cent of an employee's base gross salary? In other words, that 9 per cent comes out of the pocket of employers - not employees?
Yes, that's right. The minimum that employers have to pay is 9 per cent of each eligible employee's earnings base. For most employees, their earnings base is their ordinary time earnings. This usually means the amount they earn for their ordinary hours of work.
The Australian Taxation Office has a range of introductory publications that employers and employees can access online to help them understand super. These include:
The Australian Securities and Investments Commission (ASIC) regulate financial services and company laws to protect employees. The publication Super Decisions has been prepared by ASIC to help super fund members:
- understand more about super
- make better superannuation decisions
- find extra help and information.
Employees can obtain a copy by visiting www.fido.gov.au or phoning 1300 300 630.
[CareerOne Editor's note: The long way around to find these documents is:
Go to www.fido.gov.au and then look for the tab at the top of the home page called "About financial products". Hover over that with your mouse and you will see "Superannuation" at the top of a list pf options. Click on it.
For Super - what you need to know go to www.ato.gov.au and look at the navigation column on the left of the home page and scroll down to "Booklets & publications" and click. Then choose from either "Sort by topic" or "Search".
Alternatively, you can go to www.ato.gov.au and scroll the left hand column and click on "Individuals". Once you have clicked, choose "Individuals superannuation essentials" from the drop down menu. Look at the top of the page and click on "Booklets & publications" and then click on "Sort by topic" and then scroll down the list to "Superannuation" and then click on "Individuals" and the publication.
Alternatively, you can go to www.ato.gov.au and click on "Businesses" in the left hand navigation list. Once you have clicked, choose "Super essentials" and you will find many online advisories. Also, you will find a link to "Booklets & publications" at the top of the web page. Click on "Sort by topic" and then scroll down the list to "Superannuation" and then click on "Businesses" and the publication.]
Is an employer legally obliged to include the super contribution of a pay slip/payment summaries or is this optional?
Some employers who are covered under workplace legislation, awards or agreements have an obligation to report superannuation contributions on payslips.
While there are no tax law requirements for employers to report superannuation contributions to their employees, doing so may help them manage employee relationships and staff enquiries, especially if they already have reporting systems in place.
Is an employee within their rights to quiz an employer about the employer making their legal super contribution?
Yes. If employees are concerned about unpaid super guarantee contributions they should talk to their employer in the first instance, and ask questions like:
- how often they are currently paying their super
- into which fund they are paying it, and
- how much they are paying.
Of course, it is a good idea for employees to ask these sorts of questions when they start work with an employer (from 1 July 2005, most employers are required to ask which fund you want to use anyway).
Employees should double check their last Member Statement from their super fund, or contact them to confirm if their employer has paid their super.
After doing these two things, if employees still believe their employer is not paying enough or any super, and/or is not paying the super to their chosen fund, they can lodge an enquiry with the Australian Taxation Office by calling 13 10 20.
When employees lodge an enquiry about unpaid super they will need to have:
- their contact details and whether they give permission for the Australian Taxation Office to use their name when contacting their employer
- their employer's contact details (including business address)
- their employer's ABN (employees should be able to locate their employer's ABN from their last payment summary or from the employer's business letterhead stationery)
- the nature of their current employment arrangement, including when they started employment with their employer, and
- details of the particularly superannuation problem (when the issue started and ended including the month and year).
Are employers given any leeway regarding super payment arrears?
According to the Tax Office, employers are given 28 days after the end of the financial quarter to get their superannuation contributions in order. Although employers can pay super more regularly than quarterly if they choose.
The best way for employers to avoid paying super charges is to make sure they:
- offer all eligible employees a choice of super fund within 28 days of them starting work
- pay the minimum 9% super into an employee's chosen super fund, and
- make all employees' super payments by the quarterly cut-off dates each year (28 October, 28 January, 28 April and 28 July ).
The super guarantee charge is made up of three parts:
- super guarantee shortfall amounts (including any choice liability)
- interest on that amount (10% per annum), and
- an administration fee ($20 per employee per quarter).
The super guarantee charge is not tax deductible
We have seen some employees out in the cold when companies collapse re their entitlements including super payments. How does this happen?
Lot of employees don't raise the alarm early enough. Also know that from 31 December 2007 changes to the Corporations Act mean that employees of companies that go into liquidation, voluntary administration or receivership will stand a better chance of receiving their super entitlements. Under the changes, the super guarantee charge must be paid before payments to ordinary unsecured creditors. This means it will rank equally with employees' entitlements for wages as long as there are assets available for distribution to priority creditors.
Group Certificates/Payment Summaries
Is an employer legally obliged to provide an accurate payment summary (formerly known as a group certificate) every year?
Yes. Details that need to be provided include an employee's name, address, the period over which the payments were made, the employee's gross salary as well as any allowances paid, fringe benefit tax, union fees and son on. A payment summary must be issued by July 14 each year.
Q What happens if you have lost a payment summary/group certificate?
Contact your employer for a copy. If you cannot get a payment summary from your employer, then generally what happens is you do your tax return and provide a statutory declaration as to its accuracy. A person can usually reconstruct what they have been paid and how much tax they have paid from their pay slips.
It is vital people provide an updated address to their employer and superannuation fund when they leave a company so they receive payment summaries and notices about super from their fund.
Click for a statutory declaration form or go to www.ato.gov.au and use the navigation list of the left hand side of the home page to click on "Forms & services" then "Search" then type in "statutory declaration" and download the form.