Small business alert on super payments

Changes to compulsory superannuation payments supported by a tax office crackdown on compliance should see small business operators double checking their obligations before their first payments are due in October. The change to the definition of ordinary time earnings" could see the superannuation bill increase substantially for some businesses with corresponding employees enjoying a healthy boost to their retirement, savings.

Australian Taxation Office commissioner Michael D'Ascenzo said its risk management of taxation and superannuation compliance involved the use of profiling and data filtering. This allowed it to identify potential problems for follow-up. "This year, and looking to our centenary in 2010, we will be continuing to focus on improving compliance with superannuation obligations, including employer obligations such as the superannuation guarantee," he told the Australian Risk Policy Institute in Canberra.

The compulsory 9 per cent superannuation payment often causes confusion for employers, particularly when workers are casual or whose pay is not a simple "rate per hour" arrangement. The obligation begins once an employee starts work and is not dependent on whether they are full-time, part-time, casual or, in some cases, a contractor.

Generally speaking, it is paid for all employees who are aged from 18 to 69 and who earn more than $450 before tax in any calendar month. Teenagers under 18 who work more than 30 hours a week and satisfy the $450 a month test also qualify It is not payable for domestic or private type work of less than hours a week.

Because it is a monthly test, you might have an obligation for one month but miss out the next. While a particular award or agreement may increase the frequency of payment, generally the superannuation contribution is required to be paid within 28 day, the end of the quarter. So the June-September payment due to be paid into the super fund later than October 28. This may have a double-edged penalty if yo miss the payment.

Super guarantee penalties include non tax-deductible charges and interest may be payable. But one change may see you liable in a different way. Under the rules that apply from July 1, all employer superannuation schemes must now offer life insurance. While there are some limited exceptions to the rules, the minimum level of cover must be based on a premium of at least 50 cents a week and must provide minimum levels of cover.

You can obtain further information about the Superannuation Guarantee system by following the superannuation links from the tax office's website at www.ato.gov.au. (SOURCE/EXTRACT: The West Australian, 14.7.08).