Superannuation
Superannuation: Employees with multiple employers
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Legislation has passed allowing employees with multiple employers to opt out of receiving superannuation guarantee payments to avoid unintentionally breaching their concessional contributions cap. This paper examines how to avoid exceeding your annual concessional contributions cap.

Summary of the new rules

The Superannuation Guarantee (SG) rules were established to ensure employees receive a minimum level of superannuation contributions in respect of their employment. Where an employer fails in their obligations to pay SG, that employer will incur SG interest charges.

The SG rules include a 'maximum contribution base' beyond which an employer no longer needs to make superannuation contributions for an employee to avoid liability for SG charge. This operates as a ceiling, limiting the amount of superannuation support an employer is obliged to provide for an employee for a quarter. This means salary or wages that exceed the maximum contribution base can be excluded from the calculation of SG contributions.

The problem is that the maximum contribution base for an employee applies to each employer. If an employee has multiple employers, each employer must make superannuation contributions on the earnings they pay to the employee up to the maximum contribution base in order to avoid incurring an SG liability. This occurs even where the employee earns less than the maximum contribution base for each of their employers, but their income in total exceeds the maximum contribution base.

Accordingly, individuals with multiple employers may inadvertently exceed their annual concessional contributions cap. Where an individual's total concessional contributions (including those made by their employer) exceed their annual concessional contributions cap (currently $25,000), the excess is their 'excess concessional contributions' for the financial year.

An individual's excess concessional contributions are included in their assessable income for the year and taxed at marginal rates less a 15% tax offset (representing the tax paid in the superannuation fund). The individual is also subject to an interest charge, based on the shortfall interest rate to cover the resultant late payment of tax.

The amended rules will now allow the individual to nominate to opt-out of the SG system in respect of their wages from certain employers. The opt-out means that eligible individuals can avoid breaching their annual concessional contributions cap as a result of multiple employers making contributions into superannuation on their behalf.

The amendments provide a framework for individuals to apply to the Commissioner of Taxation (Commissioner) for an employer shortfall exemption certificate, which prevents their employer from having a SG shortfall if they do not make superannuation contributions for a period.

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