The Superannuation Guarantee amount is increasing from 9 per cent to 9.25 per cent from 1st July 2013. ACAPMA reminds employers to review their employment instruments now as the increase may be borne by the employee in some cases.

The increase

Changes to the Superannuation Guarantee (Administration) Act 1992 (the Act) mean that the Superannuation Guarantee is increasing to 12 per cent by 2019. The increases will be stepped, first going up by a quarter of a per cent in the first year and then half a per cent each year thereafter, until it reaches 12 per cent in 2019. The first of the stepped increases comes into effect on 1st July 2013, when the Superannuation Guarantee will increase from 9 per cent to 9.25 per cent.

Who pays for the increase

The Act does not specifically name employers as responsible for bearing the increase in the Superannuation Guarantee. Rather, it references the employment instrument.

For employees engaged under an instrument that refers to the salary package inclusive of superannuation, then the employee will bear the cost of the Superannuation Guarantee increase in the form of lower after tax take home payments.

However, if, as in the Awards and most enterprise agreements, the reference is to a rate PLUS superannuation, then the employer will have to bear the cost of the increase in the form of higher overall wage costs.

It is important to note that where there is ambiguity as to the engagement instrument, the Act favours the employee.

OTE?

OTE or Ordinary Time Earnings, is the basis for Superannuation Guarantee calculations. An employees OTE will depend on their employment instrument among other factors.

OTE, for the purposes of Superannuation Guarantee, is defined by the ATO as, “what your employees generally earn for their ordinary hours of work”. This includes core allowances, like dangerous goods allowances if the employee is engaged primarily as a dangerous goods driver. It also includes leading hand allowances, if they are a typical part of the employees wage. However, it does not include overtime, leave loading and meal allowances.

Other changes

In addition to the increase to the Superannuation Guarantee, there are several other changes that businesses need to be aware of. From 1st July 2013, the age limit for Superannuation Guarantee payments, previously 75 years old, will now be removed. Also from 1st July 2013, the quarterly cap, or amount of OTE after which the Superannuation Guarantee is not paid, is now $45,750. It is important for businesses to note that this cap is a quarterly amount not an annualised one. This is of particular importance when considering the contributions appropriate for project workers.

What do I do now?

As the 1st July 2013 approaches, businesses should be:

  • Reviewing employment instruments to establish if the employer or employee will be bearing the increase and what constitutes OTE;
  • Reviewing payroll systems to ensure that the default 9 per cent setting is amended appropriately; and
  • Reviewing reporting systems to ensure that contribution statements are appropriately communicated to employees at the appropriate rate.

Here to help

ACAPMA members are reminded that the ACAPMAlliance Workplace Relations Professionals are available to assist with superannuation management in your business. For more information just call 1300 160 270.

HR Highlights are things to consider, implement and watch out for in your business. They are provided as general advice and you should seek further advice on your situation by calling 1300 160 270 and speaking to one of the ACAPMA Workplace Relations Professionals its free for members.

ACAPMA membership is affordable at only $550 per year for a single site and valuable with sites gaining HR advice support and representation as well as a raft of other benefits and discounts. Click here to learn more about ACAPMA membership.

Elisha Radwanowski
BCom (HRM & IR)
Workplace Services

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