Superannuation update

Several changes to superannuation have recently commenced.

Super guarantee calculations

We would like to remind employers that as from 1 July 2008 the superannuation guarantee contributions you make on behalf of your employees must be based on “ordinary time earnings”. Make sure that you have the correct systems in place to handle this change and to plan for any additional costs.

Ordinary time earnings is generally what an employee earns for their ordinary hours of work including over-award payments, shift loading and commissions, but generally excludes such things as overtime (subject to certain exceptions).

Whilst many employers are already using ordinary time earnings to calculate the superannuation guarantee, some are using other methods, such as an earnings base outlined in industrial awards or existing employment agreements.

Life insurance and death cover

Also from 1 July 2008, minimum levels of life insurance death cover must be made available to members of employer-nominated super funds. This is the fund into which an employer chooses to pay an employee’s superannuation guarantee contributions if the employee does not nominate another fund.

Employer-nominated super funds must offer minimum life insurance for members (under 56 years of age) at a premium of at least 50c. per week with a cover at least commensurate with minimum requirements. As usual, exemptions do apply.

Personal super contributions deductible

Self employed taxpayers are entitled to claim a deduction for super contributions to their own self managed super fund (SMSF) if the following conditions are met:

	They advise their fund in writing of their intention to claim a deduction and the amount they intend to claim
	They have an acknowledgement from their SMSF that it has received their notice before lodging their individual tax return and
	They complete the correct information in their tax return, their SMSF’s return and when completing their member contribution statement.

If you would like help to implement these changes or are unsure of your obligations, please contact Saward Dawson.

Published : 28 July 2008