With the start of the new year well under way and the holidays feeling like a somewhat distant dream, reality has definitely set back in.

This week we are talking about the changes to superannuation. Please click on the view more button to read more in-depth about the changes.

Paying superannuation guarantee for your contractors

 

Employers' superannuation guarantee (SG) obligations are currently a big focus for the Australian Taxation Office (ATO).  In two recent cases, the business owners were held liable to pay superannuation guarantee for their contractors.

 

In Probin and FCT [2019] AATA 4597, the contractor had been engaged by a property maintenance business to do property maintenance tasks for 12 years. He was paid a fixed hourly rate and was responsible for his own superannuation.  He provided invoices, his own tools and used his own vehicle.  He complained to the ATO that he had not been paid SG contributions.

 

In Toowong Pastures Pty Ltd and FCT [2019] AATA 4897, the contractor provided services as part of an asbestos removal/building renovations business.

Salary sacrifice cannot reduce SG

With effect 1 January 2020, an employer can no longer use individual's salary sacrifice contributions to reduce the employer's minimum SG contributions.

For example, two employees working for the same organisation each earn $200,000.  One employee sacrifices $40,000 of annual earnings into his super fund. The employer is required to pay the same amount of super guarantee for both employees.

Timing of deductions for superannuation payments to clearing houses

 

In a recent draft guideline, the ATO has said it will not apply compliance resources to determine the income year in which an employer can deduct superannuation contributions made through the Small Business Superannuation Clearing House (SBSCH) so long as the payment to the SBSCH was made before the close of business on the last business day of the income year. 

This means eligible small business employers can claim a deduction in the income year a payment is made to the SBSCH, even if the superannuation fund receives the contribution in the following income year.

Unfortunately, the draft says this approach will not apply where the payment is made through a clearing house other than the SBSCH.  This means the deduction will only be available to those employers in the year the super fund receives the monies.

 

Special SG rule for high-income employees with more than one employer

 

If you are an employee with more than one employer and salary exceeding $263,157, your employers' contributions will result in you breaching the $25,000 concessional contributions cap.  To avoid this you can now apply to the ATO for an "employer shortfall exemption certificate". An employer who receives this certificate will not have to pay SG for you.

 

If you apply for this certificate for your employer, we recommend you negotiate to receive additional cash or non-cash remuneration, instead of SG contributions.