How Can Your Business Comply With Superannuation Requirements For Employees?
You, as an employer, are responsible for paying super into your eligible employees' chosen super funds or their stapled super funds if no choice has been made.
You can contribute your employee's super to the default super fund if they haven't made a choice.
What you need to do:
- Select your default super fund.
- Offer employees a super fund choice and keep records showing you've done this.
- Request your employee's stapled super fund details if they do not make a choice
- Provide employees' TFNs to their funds.
- Set up your systems to pay super contributions electronically to the correct fund.
If you pay extra super for an employee:
- under a salary sacrifice agreement, you must set up the arrangement for the employees' future earnings, document the arrangement and use a complying fund.
- In addition, · you must report the amounts being made to the employee's fund.
Salary Sacrifice Agreements
To create an effective salary sacrifice arrangement, you must:
- set up the arrangement for employees' future earnings
- document the arrangement
- use a complying fund.
Set Up The Arrangement For Employees' Future Earnings
The arrangement must be set up for your employee's future earnings. It can't include previously earned or accrued:
- salary, wages or entitlements
- annual or long service leave.
Document The Arrangement
You and your employee must prepare and sign a salary sacrifice agreement. Your arrangement may be challenging to establish if you don't have this documentation.
Employees can renegotiate the arrangement at any time, within the terms of their employment contract or industrial agreement. For example, if your employee has a renewable contract, you can renegotiate the salary sacrifice amount before the start of each renewal.
Use A Complying Fund
The salary sacrifice amount must be contributed to a complying fund for the arrangement period.
Contributions can't be accessed until the employee satisfies a condition of release, such as reaching retirement age.
Report The Amounts
Reportable employer super contributions (RESC) are not included in your employee's assessable income. Therefore, they do not affect how you calculate super contributions for your employees.
The following employer super contributions are reportable:
- additional contributions as part of an employee's individual salary package
- additional contributions under a salary sacrifice arrangement
- pre-tax amounts paid to an employee's super fund at the employee's direction, such as directing an annual bonus into super.
You must report extra contributions if:
- your employee can influence the rate or amount of super you contribute for them; and
- the contributions are in addition to the compulsory contributions you must make under
- super guarantee
- a collectively negotiated industrial agreement
- the rules of a super fund
- federal, state or territory law.
The extra contributions are reportable super contributions for employees unless you show that:
- the extra contributions are made for administrative simplicity
- a documented policy is in place that does not allow an employee to influence the contributions you make on their behalf.
Thank you for reading!
Should you have any queries in regards to the above please contact our office on (03) 9728 1448
The TAS Team
3/653 Mountain Highway, Bayswater VIC 3153
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