Many Australian’s are becoming increasingly aware about the importance of superannuation and building their safety net for when they retire. With Australian’s now working harder than ever before to build up their superannuation balances, it’s important to know about any vital changes to superannuation by the ATO from both an employer and employee point of view that can affect your personal and business future.
From July 1st 2013, there were many crucial changes to employer superannuation obligations. Some of these changes included: a new rate for compulsory super payments, changes to super payments for employees aged 70 years or older and changes to how you report super payments.
There are laws regulating how much super you must contribute to your employee’s super fund account. This is called the ‘super guarantee’ and is the minimum an employer should pay. From July 1st, the superannuation guarantee increased and is set to keep increasing over the next few years from the current rate of 9% to 12% by 2019. From July 1st 2013, the super guarantee increased by 0.25% to 9.25%. This increase affects both employers and employees alike. It is estimated around 8.4 million employees are expected to benefit from this increase in the super guarantee.
The next major change is super payments for employees aged 70 years or older. In the past, there was an age limit on super contributions. From 1 July 2013, there is no longer a super guarantee upper age limit. This means there will not be a maximum age for super guarantee eligibility. If you have eligible employees aged 70 years or older you will need to make super contributions to their super funds. With this new change, employees who work beyond the age of 70 will not miss out on employer super contributions if they are eligible and are able to continue to build on their superannuation for the day they do decide to retire.
Another new change is the introduction of a new super account called “MySuper”. This was bought in from July 1st 2013 and will replace existing default accounts offered by super funds. A default fund account is one chosen by you for an employee who does not choose their own super fund. If an employee has not chosen a super account by January 2014, you must pay super contributions into a MySuper account instead of your default fund account.
Another new addition is if your business employs 19 or less employees, you can get assistance in processing payments from the Small Business Superannuation Clearing House.
Earlier in the year the Government announced its intention to provide a temporary increase in the concessional contribution limit of $35,000 for individuals over 60 years of age during the 2013-14 year and over the age of 50 during the 2014-15 year.
Finally, a new data and payment standard is being introduced to make processing super payments easier for you. Employers will now be able to send super contributions to funds in one standard electronic format. If your business has 20 or more employees, you will need to start using the new standard from July 2014 and if you have less than 20 employees, from July 2015.
If you have any questions about any of these superannuation changes or would like to know more information about how they affect you or your business, please fee free to contact us.
