Superannuation is money put aside and saved while you’re working, to provide an income later in life when you retire.
The Superannuation Guarantee
In Australia, Employers must pay Super (the Super Guarantee) for
- employees 18 years or over, and being paid $450 or more (pre-tax) in a calendar month
- employees under 18 years, being paid $450 or more in a calendar month, and working more than 30 hours a week.
- some contractors paid primarily for labour, even if they have an ABN
The Super Guarantee is currently 9.5% of ordinary time earnings – this includes some bonuses, allowances, some paid leave, but not generally not overtime. It will increase to 10% from July 2021 and eventually increase to 12% from July 2025. Employers are obliged to contribute this minimum percentage, but can contribute more. Full time, part time, and casual employees are all included.
Contributions must be made on at least a quarterly basis, by the quarterly due dates. Employers must pay and report super electronically in a standard format and meet SuperStream requirements, and pay into a complying super fund.
If not paid on time, the super guarantee charge may be payable. An employee’s super contribution is counted as being paid on the date the fund receives it, not the date a clearing house receives it. This means that if a quarterly payment is due on 28th October for example, payment may need to be made up to 10 days prior.
If the accounting system used by the employer is not SuperSteam compliant, small businesses (19 or fewer employees) can use the free Small Business Superannuation Clearing House. There are also other commercial options, or use a clearing house provided by your Super Fund.
Many Vets work as contractors, have an ABN (Australian Business Number) and invoice clinics for their work. However, for Superannuation purposes, they may still be considered an employee and entitled to the Super Guarantee from their employer if they are paid wholly or principally for their labour and skills, perform the work personally, and are paid for hours worked, rather than to achieve a result. To work out whether super applies, use the ATO tool at https://www.ato.gov.au/Calculators-and-tools/Employee-or-contractor/
Temporary Residents ARE entitled to the Super Guarantee. This includes Working Holiday Makers.
When Temporary Residents leave Australia, they may be entitled to claim the super paid for them back, as a DASP – Departing Australia superannuation payment. For more information visit https://www.ato.gov.au/Individuals/Super/In-detail/Temporary-residents-and-super/Super-information-for-temporary-residents-departing-Australia/
You can add your own money into your super savings, and low or middle income earners may be eligible for government co-contributions.
Employees can initiate a salary sacrifice arrangement with their employer (pre-tax), or make their own personal contributions. There is a cap on Concessional contributions (which includes Super Guarantee payments from your employer), currently $25,000.
Tax on Super
Concessional Contributions – 15%
These are super contributions made before tax, and include super guarantee from an employer, salary sacrifice, personal contributions claimed as an income tax deduction. The cap on concessional contributions is currently $25,000 – more than this attracts extra tax
Non-Concessional Contributions – not subject to tax
These are super contributions made after-tax eg. spouse contributions or personal contributions not claimed as an income tax deduction. There is a cap on these too.
Keeping Track of Super using MyGov
Employees can nominate which Super fund they wish to have their contributions paid into – they should fill out a Standard choice form and provide it to the employer. Employees can now create a myGov account https://my.gov.au which is a central portal to which you can link Medicare, Centrelink, Child Support, ATO (Australian Taxation Office), My Health Record & other government agencies. You need a fair amount of information in order to link these agencies all in to your account, so make sure you have all your paperwork handy. Once done, you can see what Superannuation Fund accounts you have and keep track of them through the ATO link in MyGov.
For more information about all aspects of super for employers and employees, including how to find lost super, visit https://www.ato.gov.au/Super/
Kookaburra Veterinary Employment
This information includes the views and opinions of Kookaburra Veterinary Employment and is of a general nature only. Factual information is believed to be correct at the time of writing, however, should not be relied upon and any person should confirm details with the relevant authorities and through their own research prior to acting on any of the suggestions in this article.