What is Superannuation? Superannuation is your long-term investment plan upon retirement. For most people, super begins when you start work and your employer starts paying a percentage of your salary or wages into a super fund account for you. Your…
What is Superannuation?
Superannuation is your long-term investment plan upon retirement. For most people, super begins when you start work and your employer starts paying a percentage of your salary or wages into a super fund account for you.
Your super fund invests and manages this money for you until you retire.
Who Pays for Superannuation?
Compulsory super of 10.5% is paid by your employer into your nominated super fund. When you start your new job, or work, employers are by law obliged to pay 10.5% superannuation either every month or quarter depending on the size of the business.
When can you access your Super funds?
It is hard to access your super fund until you have reached the preservation/retirement age which is currently set at 65. However, under other circumstances, like hardship or terminal illness you may be able to access your super funds early. In this case speak to your super fund or Financial Advisor.
What is Reportable Super Contribution?
A reportable super contribution is an extra superannuation payment made by an employee and/or an employer, over and above the normal super guarantee (SG) contribution, which is 10.5% currently.
In other words, if you would like to grow your super funds, you can contribute more money into your super funds either doing salary sacrifice or personal deductible contribution.
There is a cap/limit up till how much you can contribute in a year, therefore, it is important to speak with a financial advisor before making any additional contribution.
How is Super paid to your nominated fund?
Employer is responsible to ensure that the super is paid on time by the due date.
If you do not pay an employee’s super guarantee (SG) to the right fund on or before the due date, the employer must lodge a superannuation guarantee charge (SGC) statement and pay the SGC to ATO.
The SGC will calculate an interest on the overdue superannuation (which is transferred to employee super fund) and a penalty for the late lodgement. In certain circumstances, ATO may deny a Tax deduction for the whole Super as a punishment for late lodgement. And therefore, it is extremely important to pay super on time to save money and to avoid stress.
Can I director be held personally liable for the failure to pay super on time?
As a company director you are responsible for ensuring that the company’s tax and super obligations are reported and paid on time. If your company does not pay certain liabilities by the due date, ATO can recover these amounts from a you personally. This is called a breach of Directors duty and ATO can issue a Director Penalty Notice for unpaid super amounts.