QUESTION
I have a Director who has advises he wishes to cease receiving SGC payments as he has another role and both SGC amounts will push him over the Personal Super Concessional Contributions cap.
Can you confirm the options we have to ensure we are still fulfilling our obligation.
Is paying the SGC amount back to the employee as wages an option?
ANSWER
The employer is required to pay super up to the ATOs maximum contributions base (MCB) which is currently $62,270 or $6,849.70 in SG contributions per quarter.
The employer is not required to pay more super than that.
If the employer wants to pay more than the maximum contributions base, that’s their prerogative, it’s ok to do so.
It’s important to remember that the ATO is only interested in the quarterly calculation. So, where an employee earns more than $62,270 in Ordinary Time Earnings (OTE) in a quarter, the employer is not required to pay additional super in that quarter. However, employers may have contractual obligations to consider as well. Sometimes, employers would pay the ‘spill over of super’ as taxable income ( not superable) to cover their contractual obligations.
Each quarter stands alone, and superannuation contributions from one quarter cannot be carried over to another quarter.
If the employer did not make the necessary superannuation contributions for the quarter then they would be liable for Super Guarantee Charge, which includes making the withheld contributions to the employee’s super fund.
The employee cannot direct the employer to cease making employer superannuation contributions for the reason that they will exceed the concessional contributions cap.
Employees with multiple employers can apply to opt out of receiving super guarantee from some of their employers.
The employee would need to provide the employer with an exemption certificate to cease SG contributions.
More information can be found on the ATO website using the following link:
Source: TAPS (The Association for Payroll Specialists)