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
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%
For assistance with managing your SMSF or any questions you may have about Super guarantees, give us a call.
Liz Gibbs – SMSF Manager