by Angela Szczepanski and Sid Sidhu, NRA Legal
The Federal Government is planning to introduce legislation in the coming months that will address an estimated $1 billion worth of annual unpaid super. The Bill, which will amend that rules that currently allow companies to reduce their super contributions, will close a legal loophole that many rely on to shore up cash flow in times of financial stress.
Currently, businesses are required to pay their employees 9.5 per cent of their ordinary time earnings as superannuation. Salaried employees are also entitled to sacrifice part of their remuneration for superannuation purposes. However, when these salary sacrifices are made, companies are able to calculate their super contribution on the lower, post-sacrifice salary level. Alternatively, they may count the salary sacrifice as part of their own contribution, resulting in employees who have short changed themselves.
This loophole was brought to light in a recent cross-agency report involving the Treasury, Australian Tax Office, ASIC and more. Although it is yet to be released publicly, the government has indicated that it will be acting immediately to prevent businesses from reducing their super obligations in this way. According to Financial Services Minister, Kelly O’Dwyer, the amendment will be the first of many legislative changes that aim to ensure compliance with superannuation rules. The Fair Work Ombudsman has also pledged to increase its monitoring of super payments.
What does this mean for your business?
The consequences for failing to meet the superannuation guarantee at law are significant. If you would like to speak to somebody about your super obligations, call the NRA today on 1800 RETAIL (1800 738 245).