Employees should treat a revelation by the tax office late last week as a wakeup call to check whether they are receiving their correct entitlements to superannuation guarantee (SG) contributions.
The ATO revealed its belief that some employers in the accounting, accommodation and computer system design industries may not be paying SG contributions for eligible employees.
While the tax office intended its announcement to serve as a reminder to employers about their obligations, it should reinforce to employees the need to understand their SG entitlements and raise any issue with their employers if necessary. (See http://www.ato.gov.au/print.asp?doc=/content/00267403.htm)
Generally, employees are entitled to SG contributions if aged between 18 and 69, paid at least $450 a month (before tax) and work either full-time, part-time or as a casual.
Employers must pay SG contributions to employees under 18 if they earn at least $450 a month and work more than 30 hours a week.
And the amount payable is nine per cent of an employee’s ordinary earnings, with some exclusions including most overtime. Employers do not have to pay SG contributions on any part of an employee’s earnings above $42,220 a quarter (for 2010-11).
The tax office website includes an employee SG contribution calculator. Employees can enter their details to determine their eligibility and the SG amount payable. (See http://www.ato.gov.au/individuals/content.asp?doc=/content/00188597.htm)
If an employee is not receiving the correct amount, according to the calculator’s conclusions, a summary of its calculations can be printed to discuss with an employer.
“If you cannot resolve the issue with your employer,” the tax office suggests, “you can use the [calculator] tool to prepare a superannuation inquiry which you can lodge electronically with us.”
Here’s a bit of an SG history lesson. SG contributions were introduced in 1992 (beginning at 3 per cent). This means that an employee who began work at, say, 20 in 1992 and retired in 2037 at 65 would have been covered for 45 years.
It really pays to make sure your contributions are correct.