Changes in Superannuation Legislation
Written on the 14 June 2013 by Macmillans Waller Fry - Accountants
Three key changes have been made to superannuation law in the past year that will significantly impact small businesses.
Firstly, the Superannuation Guarantee (SG) rate will be raised from the current 9 per cent to 12 per cent by 1 July 2019 (2020 tax year.)
Announced by the Government last year, the rise will be implemented incrementally in order to soften the financial blow on businesses. The first rise will be 0.25 per cent which will come into effect 1 July 2013, with subsequent rises after 2014 increasing by 0.5 per cent until the 12 per cent target is reached. The changes were made in order to increase the retirement fund of employees, with the 3 per cent increase resulting in a significantly larger nest egg when Australians enter into retirement.
Secondly, from 1 January 2014, small businesses will be required to pay super contributions into either a MySuper default fund or into a fund that offers a MySuper product for employees who have not selected otherwise.
Funds that do not operate as default funds, such as self managed superannuation funds (SMSFs) or choice products, will not have to comply with the new MySuper rules.
Superannuation funds will start to offer MySuper products from 1 July 2013 and when fully implemented any employee will be able to elect to have their superannuation paid into a MySuper product. There will be a significant amount of administration work for small businesses as they will have to change the default super for their employees.
Small businesses with19 or fewer employees can utilise the Small Business Superannuation Clearing House. This is a free service that lets employers pay employees’ super contributions in one transaction and can ease the administrative burden.
Lastly, the Government has abolished the upper age limit for super contributions, with the aim to encourage more mature age workers to stay in the workforce. As a result,
In order to remain compliant with the new laws, employers need to:
•• Update their payroll and accounting systems to apply the appropriate changes
Author: Macmillans Waller Fry - Accountants