Super tax tips from the ICAA

FROM 11,500 recent audits for superannuation compliance, the ATO has found that $124 million of super funds remain unpaid.

The ATO has subsequently imposed $7.44 million in penalties, and the Institute of Chartered Accountants in Australia has thought it timely to produce a list of super tax tips.

Make sure you make the payments by the deadlines. The deadline for paying SGC for your employees for the year ended June 30 2003 was July 28 2003. If it was not paid by this date, the amount still has to be paid but it is no longer tax deductible and it may include interest, administrative charges and penalty interest of up to 200 per cent of the amount. Make sure you are calculating the correct amount. The SGC rate is 9 per cent. This is on top of what the employee receives as salary and wages. It is not 9 per cent of the total cost of employment. Make sure you pick up all amounts on which superannuation is payable. For the purpose of SGC, many allowances and other payments are included in the amount on which an employer has to pay superannuation on. Make sure you only pay what you need to. There is a series of wages on which employers are not required to pay superannuation. These include employees who receive less than $450 in a month, employees who work less than 30 hours a week and are under 18 years old and employees over 70 years old. Make sure you only claim a deduction where you can. An employer can only claim deductions for superannuation contributions up to certain thresholds based on the employee’s age. Therefore, if an employee wants their employer to put more than these thresholds into the employee’s super fund, the employer will lose any deduction for the amounts above the thresholds. The 2002-03 thresholds are: Under 35: $12,651, 35-49: $35,138, 50 and over: $87,141 Finally, make sure you are ready for the next year: From July 1 2003, employers will have to make their SGC at least four times a year, being once every quarter. Further, employers will have to report in writing to each employee every quarter the amount contributed and to whom it was paid.

Are your systems ready to do this or will they be ready by October 28 2003 (first quarter payment date)?


Tax tips for individuals


To encourage people to save using superannuation, the Government has offered numerous ways to take advantage of superannuation.

Individuals should be aware that for each of the tips below, there are detailed eligibility requirements and advice from a chartered accountant should be sought.

Salary package additional superannuation. It may be beneficial to ask your employer to put more than the required 9 per cent in your superannuation fund by ‘salary packaging’ some future income you will earn. There are tax advantages in doing this for many employees as super is taxed at 15 per cent on entering the fund rather than your marginal tax rate (which can be as high as 48.5 per cent). But remember that once it goes in to the super fund, you generally have to wait till you retire to get it out. Keep track of your super. From July 1 2003, each quarter you should receive a report from your employer in writing stating the amount they have contributed and to whom it was paid. Check that your employer is making appropriate payment. Self-employed persons. A deduction is available for contributions made to super funds by self-employed persons up to $5,000 plus 75 per cent of the amount over $5,000 of the contributions made. Children under 18. Superannuation contributions up to $3,000 for each three-year period may be made on behalf of a child under the age of 18. However, these contributions are not tax deductible. Spouse contributions. Contributions can be made to the superannuation fund of a spouse and a tax rebate of up to $540 is available depending on the assessable income of the spouse (must be under $13,800) and the amount contributed. Government co-contribution. Although the legislation has yet to be passed by the Senate, individuals may be entitled to a Government co-contribution to their superannuation provided they satisfy certain conditions. If the legislation is passed, the maximum amount of the co-contribution is $1,000 for employees on incomes of  $20,000 or less.

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