Superannuation
Superannuation has gone through significant change in Australia over recent decades.
The most significant changes that have occurred are:-
- 1983 when superannuation funds became taxable for the first time.
- 1992 when compulsory superannuation was introduced. Compulsory superannuation is now made at 9% of an employee’s Gross Ordinary Time Earnings.
- 2007 when a new system of contribution limits was introduced and superannuation benefits taken after age 60 became tax free.
There have been many other adjustments to superannuation legislation since 1983, but in essence these changes have focused on encouraging people to fund their own retirement by providing a low tax environment during the accumulation phase and generous tax concessions for electing to take retirement benefits as a regular income stream. At the same time measures have been introduced to prevent or discourage people from either accumulating too much in the low tax superannuation environment or accessing their benefits too early and subsequently relying on the social security system to fund their retirement.
Employers must provide a minimum level of superannuation to their eligible employees or pay a non-deductible superannuation guarantee charge to the ATO. Superannuation paid for employees will usually be tax deductible up to certain age based limits.
The superannuation you provide must be paid to a superannuation provider by the 28th day after the end of each quarter. From 1 July 2005 employees are able to nominate their choice of fund.
If an employer fails to meet a quarterly obligation they must lodge a superannuation guarantee charge statement, otherwise the system is self assessing, and subject to normal audit checking by the ATO.
Other helpful links are:-
Some clients like to have control over their superannuation investments and choose to run their own Self Managed Superannuation Fund (SMSF). People considering this option should be aware that a minimum of $150,000-$200,000 needs to be invested in the fund otherwise the administration costs become too high as a percentage of total funds. I am able to assist clients in the establishment and ongoing administration of a SMSF. Please contact me if you require any further information.