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Super changes that every business owner (and some individuals) should know

There are several super issues to be aware of from an accounting perspective… especially now that the ATO are watching super more closely.

Who do you have to pay super for?

A lot of businesses get this question wrong. It’s not just employees you have to pay super for – if you hire certain contractors who work solely for you, you’re required by law to withhold super and pay work cover for those individuals.


How much super do I have to pay?

Right now, the answer’s simple – 9% – but the government decided to shake things up with last year’s budget. Below is a table highlighting the new superannuation guarantee percentages moving forward:

PeriodSuper Guarantee Rate (%)
1st July 2003 – 30th June 20139%
1st July 2013 – 30th June 20149.25%
1st July 2014 – 30th June 20159.5%
1st July 2015 – 30th June 201610%
1st July 2016 – 30th June 201710.5%
1st July 2017 – 30th June 201811%
1st July 2018 – 30th June 201911.5%
1st July 2019 – 30th June 2020 and onwards12%

What happens if I don’t pay the super guarantee?

If you think you can get away without paying super for eligible employees and contractors, think again – the ATO is cracking down big time in this area.
If you miss paying the super by the required deadline, you will be required to pay interest and admin fees on the overdue super. And if you don’t declare and pay overdue super by the date the superannuation guarantee statement is due, the company directors can be made personally liable for super debts.

When can I claim a deduction for superannuation contributions?

You can claim a deduction for any superannuation contributions made for any employees or contractors (including salary sacrifice amounts), unless your income is personal services income (PSI). If your income is PSI, you will only be able to claim the required superannuation guarantee percentage (being 9% for the current financial year).

Personal Contributions (10% Rule)

If you are not a business, then you can claim a deduction for concessional contributions you made into your fund for the year (up to $25,000) as long as your work related income is less than 10% of your total income. So unless most of your income comes from passive investments such as interest, dividends, distributions or rental properties, you are not going to meet this test and cannot claim a deduction for your super contributions.

Excess Contributions Tax

Every year many individuals find themselves breaching their superannuation caps and having to pay excess contributions tax. The main issue is that your super fund works on a cash basis. So if you want to pay a super contribution in the current year, make sure you pay it to the fund at least a week before the end of the financial year so it has enough time to clear.
Employees – sometimes your employer will be late paying super into your fund, so take this into account and check how much your employer has paid for the year before bringing your contributions up to your maximum caps.
Finally, remember: superannuation cap changes were announced last budget, with concessional caps for everyone being limited to $25,000 and non-concessional caps for everyone being limited to $150,000 (or $450,000 for 3 years under the bring forward option).

Government Co-contribution – who will receive it and how much?

The government has announced changes to the government co-contribution which are currently still before parliament. The changes being proposed are for the maximum co-contribution entitlement to be $500, with the matching rate reduced to 50%.
To be eligible for the co-contribution, your income (which includes assessable income, reportable fringe benefits and reportable super contributions less allowable business deductions) needs to be between $31,920 and $46,920.

Low Income Super Contribution – what is it and who is eligible?

The government has announced they will assist low income earners to save for retirement through a new scheme called the Low Income Superannuation Contribution. This scheme will see the government contribute between $20 – $500 into super for eligible individuals (on top of any government co-contributions the individual is eligible for).
Below is the criteria you have to meet to be considered for this scheme:
  • You have to have made concessional contributions for the year into a complying super fund
  • Your adjusted taxable income does not exceed $37,000
  • You are not a holder of a temporary resident visa
  • 10% or more of your total income is derived from business or employment
  • The amount payable is $20 or more

The government will work out your eligibility via your tax return (if you are required to lodge), or through other means via the information that they can collect from external sources.

Also if you are currently 55 years or older and retired, or 65 years or over (retirement not required), then you can apply to have the low income super contribution paid directly to you. Otherwise the contribution will go straight into your super fund.

If you have any questions regarding your personal or business super situation, contact us on (03) 8888 4000.

Written by:

Aimee Hintum