Incorrectly filing half-yearly contributions results in significant fines, as a Provider has a legal obligation to ensure such contributions are made. MySuper is governed by a stricter set of regulatory rules than traditional industry vehicles. As their name suggests, they offer a range of super-low fees and (generally) high investment performance. Simplicity is the major appeal of the design of MySuper products.
Employers and employees must meet certain half-yearly contribution standards. Administrators must make sure these standards are met. If an employee has lost or forgotten about half yearly contributions before receiving wage slips, the employer can make personal contributions for them for the remainder of the tax year. For example, if an employee is earning $48,000 per year and must contribute 9% of at least $48,000 to their superannuation account each year (as a minimum – depending on their Super co-contribution, their actual rate of first 2% might be less).
If an employee does not contribute the required amount to their super account for a particular period, the Administrator is liable for the outstanding contributions on behalf of the employee. There are a number of ways an employer can correct this:
The employer can make up the breach himself
He can use wages withheld from the employee’s final pay to make up the entire shortfall
The employer can ask the employee to make up the shortfall
If this occurs and the Administrator decides to take these further steps, ensure that they do so formally, even if they have no objections to making up the shortfall itself.
What are the Consequences?
Non-compliance is considered a serious offence under the Superannuation Guarantee (Administration) Act 1992. Non-compliance is also a breach of a focused set of occupational and financial regulations. The consequences for such non-compliance can be quite severe. In 2008/09, there were just over 96,000 penalty notices issued to employers and trustees under the Superannuation Industry (Supervision) Act 1993.
For this reason it is worth taking some time to investigate and determine the applicable rules for your company, keeping in mind that these rules can apply differently depending on which Australian state an employer is located. The administrators of the superannuation income funds must lodge a return to demonstrate how much tax was paid on behalf of you and/or your client. If you have not done so, a fine is given by the tax department; depending on the severity of the non compliance a fine can be given as a percentage and another fine can also be given as a flat amount.
If the breach is not made up then a fine is imposed based on the total amount over which the breach occurred, the subsequent payment to the tax office is known as a super guarantee charge.
If you don’t complete your half-yearly contributions obligations, they can be made up in the following ways:
Make a lump sum payment,
Paying a lump sum into your super fund within two months of the end of the quarter in which the omission occurred and within nine calendar months from the end of the quarter in which the omission occurred.
Depending on the amount omitted, if extra contributions are made will your super fund try to attract potential investment returns by investing in riskier assets. In doing so it could negatively affect the requirements that you have set with regard to your asset allocation, super fund managers can offer a variety of different portfolios, ranging from cash to very risky assets, you need to check with your fund manager which will be appropriate to select, based on your needs.
Lastly, if you are the sole trustee of a self-managed super fund under trust deed, unless you notify the Commissioner of Taxation before the 31st of December each year stating the adoption or revocation of an election for a member or for the fund, you are treated as not having made or revoked the election, see Military Super.
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