Super Co - contributions - Traps For New Players
18/04/05
Australian businesses would do well to come to grips with the many compliance issues associated with the Federal Government's superannuation Co-contribution Scheme.
In a nutshell, the scheme involves the Commonwealth contributing $1.50 for every dollar of personal contribution by eligible employees up to a maximum of $1500.
According to General Manager of Tasplan Super, Neil Cassidy, the first 'trap' for business is to do with the law as it applies to payment of member contributions.
An employer must forward any member contributions to the applicable super fund within 28 days. For those businesses locked into a quarterly cycle of super payments, the risk might be that these personal contributions are held for a time so that payment coincides with the deadline for quarterly contributions.
In simple terms, this would be a breach of the law. If a business deducts personal contributions, it must get these to the relevant super fund within 28 days.
Cassidy says that the second issue which business would do well to be aware of is that if there is a personal contribution in the form of an after tax salary deduction in the month of June, and that money isn't paid by the employer to the super fund until July, that amount won't be included by the Australian Taxation Office for the purpose of calculating the Co-contribution payment for the previous year.
In other words, a personal contribution must be received by a super fund in the period to which the Government's Co-contribution will apply.
If a June salary deduction is not going to be paid to a super fund in that month, employers would do well to make sure that employees clearly understand this.
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