A QUICK OVERVIEW
Basically SG payments are made on Ordinary Time Earnings (OTE) – just what is included in OTE can be a bit of a mystery.
OTE is defined in s6 SGAA to include:
• the total of earnings in respect of ordinary hours of work
• over‐award payments, shift‐loading and commissions
OTE specifically excludes:
• payments in lieu of unusual sick leave
• unused annual leave payments and unused long service leave payments
• On Call allowances
OTE is capped at the maximum contribution base ‐ $51,620 each quarter for the FY2017
- For FY2017 the maximum SG of 9.5% applies to OTE of $206,480 (however the rule is applied to each separate quarter – so if you are over one quarter and under the next there is no claw back of unpaid SG on amounts paid in excess during the previous quarter(s))
- From 1 July 2017 the concessional contribution (CC) cap reduces to $25,000
- OTE of $263,158 x 9.5% = $25,000
There are also some more tricky situations particularly where a bonus or expense is paid the following table demonstrates some of those issues.
Also worth noting is that it is not possible to contract out of SG, in fact the rules will capture a contractor as an employee based on a number of other factors. The following Table will give some guidance of some but not all circumstances that need to be considered.
And finally the following gives a timeline to the current and future SG rates.
1 July 2016 to 30 June 2021 9.5%
1 July 2021 to 30 June 2022 10.0%
1 July 2022 to 30 June 2023 10.5%
1 July 2023 to 30 June 2024 11.0%
1 July 2024 to 30 June 2025 11.5%
1 July 2025 to 30 June 2026 onwards 12.0%
To find more information about Super Guarantee check out the the ATO website . They also have a SG contributions calculator
For assistance with managing your SMSF or any questions you may have about Super guarantees, give us a call.
Liz Gibbs – SMSF Manager
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