Transcript No Slide Title

Chapter 7
Superannuation
Guarantee Scheme
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a
Tax Procedures for your Business by Ian Birt,
Slides prepared by Peter Miller
1
OVERVIEW OF SUPERANNUATION
GUARANTEE
The purpose of the scheme is to ensure
that employees have funds available for
retirement.
• The scheme is administered by the
Australian Taxation Office.
• It is a separate tax to income tax and is
paid by employers.
• The contributions are in addition to the
wages employers pay their employees.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a
Tax Procedures for your Business by Ian Birt,
Slides prepared by Peter Miller
2
Minimum Superannuation Support
Eligible employees
• The eligible employees to provide minimum
levels of superannuation support for are
essentially the same as those defined for
PAYG purposes.
• Under the ‘control test', a worker is an
employee if the payer controls how, when,
where and who is to do the work.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a
Tax Procedures for your Business by Ian Birt,
Slides prepared by Peter Miller
3
Employer’s Superannuation
Obligations
Have superannuation
contributions been
provided for all eligible
employees?
No
Employer must pay
Superannuation
Guarantee Charge.
Yes
Were enough
superannuation
contributions paid for each
eligible employee?
No
Employer must pay
Superannuation
Guarantee Charge.
Yes
Were the superannuation
contributions paid into an
approved fund?
No
Employer must pay
Superannuation
Guarantee Charge.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a
Tax Procedures for your Business by Ian Birt,
Slides prepared by Peter Miller
4
Exempt Employees
• Employees paid less than $450 gross in a
month (by each month).
• Employees aged under 18 who work part
time (i.e. 30 hours or less per week).
• Employees aged 70 and over.
• Employees doing work of a domestic or
private nature for 30 hours per week or less
(e.g. part-time housekeepers or gardeners).
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a
Tax Procedures for your Business by Ian Birt,
Slides prepared by Peter Miller
5
Minimum Contributions Required
Minimum
amount of superannuation contribution
$
=
Prescribed Rate ($) x Employee Earnings Base
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a
Tax Procedures for your Business by Ian Birt,
Slides prepared by Peter Miller
6
Payment of Contributions
• Employer superannuation contributions
can be paid annually.
• Contributions are calculated for each
quarterly period of the income year.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a
Tax Procedures for your Business by Ian Birt,
Slides prepared by Peter Miller
7
PRESCRIBED RATES
• 8 per cent for 2001/2002.
• 9 per cent for 2002/2003 and
onwards.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a
Tax Procedures for your Business by Ian Birt,
Slides prepared by Peter Miller
8
Employee Earnings Base
• An employee's earnings base is not
necessarily the same as the actual earnings
of the employee for the income year.
An employee's earnings base may be
defined in the:
• Relevant superannuation fund trust deed.
• In the relevant industrial award.
• In any existing agreement made with the
employee.
If an employee's earnings base is not defined, it is ordinary time
earnings that are relevant.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a
Tax Procedures for your Business by Ian Birt,
Slides prepared by Peter Miller
9
Minimum Superannuation
Contributions
The prescribed percentage
multiplied by the employee's
earnings base.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a
Tax Procedures for your Business by Ian Birt,
Slides prepared by Peter Miller
10
Paying Contributions
CONTRIBUTIONS FOR AN EMPLOYEE MUST BE PAID INTO:
• A complying superannuation fund, or
• A retirement savings account.
For each income year, employers must pay the minimum amount of
required superannuation by 28 July after the end of the relevant
income year.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a
Tax Procedures for your Business by Ian Birt,
Slides prepared by Peter Miller
11
Deductibility of Contributions
Employers can claim any
superannuation contributions paid for
employees as an allowable deduction
for income tax purposes.
The deductibility of contributions paid for each employee,
however, is subject to age-based upper limits.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a
Tax Procedures for your Business by Ian Birt,
Slides prepared by Peter Miller
12
Superannuation Guarantee
Charge
(SGC)
Employers who do not provide the
minimum amount of superannuation
support for each employee in an income
year must pay an annual superannuation
guarantee charge.
The charge is paid to the ATO with lodgment of a
Superannuation Guarantee Statement.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a
Tax Procedures for your Business by Ian Birt,
Slides prepared by Peter Miller
13
Disadvantages for an Employer
who Pays the Charge
• The charge paid is greater than the
minimum amount otherwise payable
children's school fees.
• The charge paid is not tax deductible.
• The charge is based on actual wages
paid, whereas the minimum
superannuation support may be based
on a lower earnings base.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a
Tax Procedures for your Business by Ian Birt,
Slides prepared by Peter Miller
14
CALCULATION OF CHARGE
Any SGC payable comprises three components
•
Shortfall component.
•
Nominal interest component.
•
Administration fee component.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a
Tax Procedures for your Business by Ian Birt,
Slides prepared by Peter Miller
15
Paying the Charge
•
•
Employers are required to self-assess any
SGC payable.
This is done by completing a
Superannuation Guarantee Statement,
which is available from the ATO.
A completed statement must be lodged at the ATO by 14 August after
the end of the income year with payment of the calculated charge.
A payment remittance advice is included with the statement.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a
Tax Procedures for your Business by Ian Birt,
Slides prepared by Peter Miller
16
RECORDS REQUIRED
•
•
•
Annual payroll amount.
Superannuation contributions paid for
each employee.
If employers pay the SGC, they must also
keep records which explain how they
calculated the charge paid.
The records must be retained for five years.
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a
Tax Procedures for your Business by Ian Birt,
Slides prepared by Peter Miller
17
CHAPTER 8
Discusses
Other Collection Schemes
Copyright  2003 McGraw-Hill Australia Pty Ltd PPTs t/a
Tax Procedures for your Business by Ian Birt,
Slides prepared by Peter Miller
18