On 1 July 2013 the Superannuation Guarantee (Administration) Amendment Act 2012 will become effective. The Act passed by the Federal Government in March 2012 results in important changes for employers regarding their superannuation obligations.
The Act increases the amount of minimum Superannuation Guarantee (SG) contributions for all employees from 9% to 12% phased in over 6 years.
Obligations for employers
From 1 July 2013 the minimum rate of SG contribution increases for all employees.
The current minimum rate of SG contribution of 9% will increase to 9.25% (effective 1 July 2013) of the relevant employee’s salary or wages up to the maximum SG contribution base.
Where an employee earns more than the maximum SG contribution base, the employer is only required to contribute SG on the maximum SG contribution base.
The maximum SG contribution base is reviewed annually. For the financial year 2012-13 the maximum SG contribution base is $45,470 per quarter or $181,880 per year.
The SG rate will increase and be phased in over the next 6 years as provided in the table below:
|INCOME YEAR||SG CONTRIBUTION RATE %|
Removal of age limit
At present, employers are not legally required to make SG contributions with respect to employees aged 70 and over. However, effective 1 July 2013 the age limit will be removed.
The role of the fund administrator
Fund administrators and fund accountants can play an important role in the payment cycle in accurately recording and processing payroll at the relevant statutory rates. This information needs to be matched accurately to payroll records and should be co-ordinated by the fund administrator.
These changes will increase the cost of superannuation for employers. It may be possible to the offset the SG contribution increases by reducing the salary component of remuneration or offsetting them against personal employee superannuation contributions. However , this will depend on the specific circumstances including the terms of the relevant employment contract. Specific advice should be obtained in this regard from a lawyer.