Changes to the Superannuation Regime

The passing of the Superannuation Guarantee (Administration) Amendment Bill 2011 last week (as part of the federal Government's Mining Tax package) will have a significant impact over time to employers' superannuation obligations starting from 1 July 2013.

1.   Increased superannuation guarantee contributions rate

The new legislation will gradually lift the superannuation guarantee contribution percentage from its current level of 9% to 12% by July 2019. The increase to superannuation contributions will start for contributions accruing in the quarter beginning 1 July 2013 with an increase of 0.25% on 1 July 2013 and subsequent increases effective each 1 July until 2019 as shown below:

        Income year                                          Charge percentage (%)

        Starting 1 July 2013                                         9.25

        Starting 1 July 2014                                         9.5

        Starting 1 July 2015                                         10

        Starting 1 July 2016                                         10.5

        Starting 1 July 2017                                         11

        Starting 1 July 2018                                         11.5

        Starting I July 2019                                          12


2.    Removal of the age cap on employer contributions

The legislation also abolishes the superannuation guarantee age limit of 70. For salary or wages earned from 1 July 2013 employers will have to make superannuation contributions for their employees over 70 years of age as if they were contributing to any other employee. The contributions will also be tax deductible for employers as of 1 July 2013, as with contributions for other employees, and will have to equal at least 9.25% of the employee's ordinary time earnings as with other employees.

3.    Removal of the contributions tax for low income employees - For information only

Another act, the Tax Laws Amendment (Stronger, Fairer Simpler and Other Measures) Bill 2011 (also associated with the Mining Tax package) will introduce a concession whereby the tax paid by the fund on employer superannuation contributions for employees earning up to $37,000 will be returned to the fund at the end of each financial year. The rebate of the contributions tax to the fund will be done between the fund and the ATO and will not involve employers.

Please contact this office if you have any queries.




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