As most employers know, Superannuation guarantee is an essential part of employing people. In 1991 the modern Superannuation Guarantee was introduced to Australia with it being implemented at 3% of their employees gross wage. This percent has risen to the current 9.5% and although further increases were planned, this is currently on hold.
There has been minor changes to the system, however largely it remains unchanged over the last 30 years. The decision to introduce such a system and the foresight has been an amazing leap forward for the Australian people, with it being considered the second best in the world in 2015.
It is essential that employers specify within their employment contracts if the salary or wage is inclusive or exclusive of the Superannuation Guarantee (SG). This can often cause confusion for a new, young employee moving into the workforce who does not understand the system yet. Transparency is vital and it’s important to be open and honest with employees on what their entitlements will be.
With the expectations of Superannuation now set in stone, it’s also important to be compliant and ensure that the employer is actually paying the SG for employees. Therefore, the employee needs to check their contributions in their Superfunds regularly to ensure payments are being made. Some large employers choose to pay monthly – this is not a requirement, but does assist with their cashflow. The SG is actually only due 28 days after the end of each financial quarter.
With most accounting software packages there is usually a system in place to send all contributions to a clearing house for payment. For instance, Xero offers the perfect solution for ease of lodgment. Once the auto-super has been set up and a payment authorised, the funds come directly out of the linked bank account within a couple of days. The rest is up to the clearing house to direct funds to the correct Superfunds for them. This is an amazingly simple solution which makes compliance a breeze. It is also important to note that it is best to lodge the SG on or around the 18th of the month to allow the clearing house time to finalise the payments.
If you are an employer and are concerned that you may be non-compliant with your Superannuation – it’s essential that you get up to date to avoid fines and penalties. Please contact us to help get you back on track and stay on track.