The Super Blog
Superannuation changes every employer needs to know!
Small Business Superannuation Clearing House Transition to the portal in 2018
Since the introduction of SuperStream, all employer Superannuation lodgements must be made through an approved Super Clearing House. Many super funds offer the clearing house function, and the ATO has also provided a small, free one, called the Small Business Superannuation Clearing House (SBSCH).
Employers who are using other approved superannuation clearing houses may continue to do so, but if you are using the SBSCH, take note! It is moving to the ATO’s portal system during February 2018. The SBSCH will cease operation on 19 February and the new function will be available on the ATO portal from 26 February. The ATO will migrate all historical information over to the portal, and when you go to the SBSCH website after the transition, you will be redirected to the Business Portal. I recommend obtaining copies of any previous lodgements and employee details that you want to retain from the SBSCH before it closes on 19 February.
Businesses and bookkeepers who use the SBSCH need to prepare for this transition by creating access to a portal. BAS Agents will be able to lodge superannuation payments through the BAS Agent Portal. Tax Agents will be able to lodge superannuation payments through the Tax Agent Portal. Everyone else will use the Business Portal using either;
- AUSkey for each ABN, or
- myGov account linked to multiple ABN’s.
Each AUSkey can only be linked to one ABN. You can apply for an AUSkey at abr.gov.au/AUSkey. An AUSkey can only be linked to one USB stick, or one computer.
However, if you need to lodge superannuation for several different entities, you can use an alternative function called ‘Manage ABN Connections’. This enables you to link multiple ABN’s to your myGov account. Simply login to myGov, go to Account Settings, and Manage ABN Connections. You can add each entity here. Once this link has been established between your myGov account and your selected entities, you will then be able to access the Business Portal this way to lodge superannuation payments.
Either AUSkey or myGov/Manage ABN Connections will enable you to access the Business Portal to continue lodging your superannuation payments.
Once you have logged in to a portal, you will see a new ‘Manage Employees’ tab in the menu on the left of the screen. This is basically the old SBSCH function with the same headings and functionality, just a different appearance.
If a business owner according to the Australian Business Register (ABR) wishes to give Business Portal access to their bookkeeper or employee, they can use the Access menu tab in the portal to do so. Each employee or bookkeeper will then need their own log in credentials.
Late Payment Penalties
Calculating super is very straight-forward: for this year 9.5% of ordinary time earnings before tax must be contributed by the employer to an approved superannuation fund via an approved superannuation clearing house by the 28th day after each quarter. Therefore, the due dates are the 28th of January, 28th of April, 28th of July and 28th of October.
Payment should be made several working days prior to the due date to allow funds to be processed and cleared in time.
If you miss the due date, you have one month to lodge an SGC Statement which includes the original amount and the Superannuation Guarantee Charge (SGC). Therefore, the due dates for the SGC Statement and payment are the 28th of February, May, August and November.
The SGC consists of interest on the payment, currently at a rate of 10%. It also consists of an administration fee of $20 per employee, per quarter. The Business Portal has an SGC Calculator to help you work out these debts. Please note that after the SBSCH migrates to the portal it may become difficult to avoid paying the SGC on late payments.
If you know you’re going to miss the SGC Statement due date as well, you can request an extension of time to lodge and / or pay. The request must be in writing, explain why you need the extension and be submitted before the SGC Statement due date.
Superannuation payments by employers are considered by the ATO as extremely important, and as a higher priority than creditor bills. When cashflow is tight, superannuation payments must be budgeted for in advance. Currently, super payments and SGC Statements are self-assessed and managed by employers. However, the ATO may audit at any time, and for as many years back as they choose. The SGC and penalties may be applied to the entire history of an employer’s late or incomplete superannuation payments.
Super Choice Form
The ATO now says ‘You must provide employees who are eligible to choose a super fund with a Standard Choice Form (or equivalent) within 28 days of their start date, unless they give you details of their chosen fund first.’
We recommend using the electronic version of the form to enter your Employer Details at Section B, and clearly identifying your default super fund here before asking the Employee to complete Section A. When the employee has completed Section A, the employer needs to then complete Section C, ensure that the correct data is entered into the payroll system, and keep the form for five years. For efficiency’s sake, the employer can complete Section B and print out multiple copies, ready to give to every new employee. Further information about obligations is contained in this form.
If the employee does not provide sufficient details to enable payment to their chosen super fund, the employer is then allowed to pay the default super fund instead.
Super Choice Form
Superannuation for Contractors
Many business owners are not aware that Superannuation Guarantee can apply to contractors if the relationship is of an employer – employee nature.
The ATO considers the following:
- Who controls the work hours?
- Can the sub-contractor delegate work to another?
- Is the labour incidental to the materials provided, or vice versa?
- The nature of the original contract that was agreed on by both parties
For example, if a sub-contractor provides a tax invoice with an ABN and charge GST, the invoices are mostly for their own labour hours and 30% for materials and they are told when, where and how to conduct their work by the primary contractor, that would be deemed an employment relationship. The primary contractor will need to pay superannuation for the sub-contractor at a rate of 9.5% of the labour portion of the tax invoice.
Future Superannuation Amounts
The ATO is planning to increase the Superannuation Guarantee Contribution percentage from 9.5% to 10% on 1 July 2021. It will then increase by half a percent each year until it reaches 12% on 1 July 2025. This rate of 12% is expected to remain stable in the future.
It is very common for business owners to take the necessary step of employing staff before they fully realise their employer obligations. If you are having trouble understanding, managing or paying your obligations as an employer, please talk to the team at The Money Edge about assistance and possible solutions.
The Money Edge | Bundaberg