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Your super update

June 7th, 2015

Employers can rest assured there’s no need to update the rate of superannuation contributions this year. The Federal Government may have changed much for small businesses in the 2015 Budget, but the Superannuation Guarantee (SG) remains at 9.5 per cent.

The SG rate will remain on hold for the next six years, until July 2021 when it rises to 10 per cent and then increases by 0.5 per cent each financial year until it reaches 12 per cent.

It’s important to meet your SG obligations or risk facing a Superannuation Guarantee Charge (SGC). The SGC is a tax with the amount determined by how late the payment is. This shortfall, plus an interest rate of 10 per cent and administration fee of $20 per worker per quarter is payable to the Australian Taxation Office. To find out more, use the ATO’s SGC statement and calculator tool.

Avoiding the SGC is easy if you meet cut-off dates for superannuation contributions. Quarterly payments are:

  • Quarter 1: July 1 – September 30 period, payment cut-off date is October 28
  • Quarter 2: October 1 – December 31 period, payment cut-off date is January 28
  • Quarter 3: January 1 – March 31 period, payment cut-off date is April 28
  • Quarter 4: April 1 – June 30 period, payment cut-off date is July 28

The SG applies to all employers, whether they operate a small, medium or large sized business. If you are unsure whether you need to make super contributions for people you employ, visit the ATO’s Superannuation Guarantee eligibility decision tool. After answering a series of questions, you will receive a report about whether you need to make super contributions and a summary of your super obligations.

A report by the Australian National Audit Office found between 11 and 20 per cent of employers could be non-compliant with their SG obligations. The report found non-compliance is particularly rife in small businesses and industries “where a large number of cash transactions and contracting arrangements occur”.

By June 30 2014, Australia’s SG debt had reached more than $1 billion and has been growing at a rate of 12 per cent per annum since 2011-12.

Small business operators should also take recent Federal Budget announcements into account for the 2014/15 financial year. As part of a $5.5 billion small business and jobs package, a range of measures aimed at stimulating small businesses with an aggregate annual turnover of less than $2 million were made available.

These include:

  • Immediate deduction for assets costing less than $20,000 for small businesses. This finishes on 30 June 2017.
  • The income tax rate has been reduced to 28.5 per cent for small businesses. The government will also provide a 5 per cent tax discount to unincorporated businesses with annual turnover less than $2 million from 1 July 2015. These changes apply from the 2015–16 income year.
  • Fringe Benefits Tax on all portable electronic devices used for work will be abolished from April 1, 2016.
  • From July 2016, if your turnover is less than $2 million per year and you change the legal structure of your small business, you will be able to rollover your Capital Gains Tax liability.

Click here for more information on tax changes for small businesses.

This publication was issued by First Super Pty Ltd (ABN 42 053 498 472, AFSL 223988), as Trustee of the First Super superannuation fund (ABN 56 286 625 181). It does not consider your personal circumstances and may not be relied on as investment advice. Content was accurate at the date of issue, but may subsequently change. You should contact us on 1300 360 988 for updated information and to obtain a copy of the product Disclosure Statement.