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Business owners should be aware of changes to the superannuation guarantee legislation which took effect from the quarter commencing 1 July 2008. As you know, the superannuation guarantee legislation provides for compulsory employer contributions to employee superannuation (and for contractors in certain situations). The main basis used for working out contributions has been to use “ordinary time earnings” (OTE). However, the legislation has allowed other methods in certain circumstances. Legislative changes mean that, for the quarter commencing 1 July 2008, the ONLY earnings base that employers can use for calculating their superannuation guarantee obligations will be the OTE basis.
It is a good time for business owners to review their obligations to ensure they are complying with the requirements. You should be aware that OTE includes not only normal weekly wages but also things such as bonuses and other over award payments, shift loadings and commissions. However, it does not include overtime, lump sum payments made on termination of employment for unused annual or long service leave or some other types of payments. If business owners do not pay proper superannuation contributions, employees may make complaints to the Australian Taxation Office and may be faced with having to pay large amounts retrospectively together with significant penalties and even prosecution in extreme cases. Business owners should also be careful to consider the requirements of employment agreements and any applicable award or collective agreement in implementing these changes. If higher superannuation contributions are payable, it may be necessary to consider obtaining the agreement of relevant employees for the extra contributions to be classed as part of the existing remuneration package.
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2008 Bulletins