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How does the super guarantee charge work?

Posted on September 20, 2017 by admin


Employers who do not pay the minimum amount of super guarantee for their employee(s) by the due date may have to pay the super guarantee charge (SGC). The charge is made up of super guarantee shortfall amounts including any choice liability calculated on your employee’s salary or wages, interest on those amounts (currently 10 per cent) and an administration fee ($20 per employee, per quarter). Employers must report and rectify the missing payment by lodging an SGC statement by the due date and paying the SGC to the ATO. Employers may be able to use a late payment to reduce the amount of SGC, however, they must still lodge an SGC statement and pay the balance of the SGC to the ATO. The ATO prioritises the collection of unpaid SGC debts. If an employee reports an employer for unpaid super, the ATO will investigate on their behalf. Employers must lodge their SGC statement and pay the charge by the due date. Quarter Period Due date 1 1 July – 30 September 28 November 2 1 October – 31 December 28 February 3 1 January – 31 March 28 May 4 1 April – 30 June 28 August If a due […]


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New measures to crack down on super non-compliance

Posted on September 14, 2017 by admin


The Australian Taxation Office (ATO) will receive additional funding for a Superannuation Guarantee Taskforce to crack down on non-compliance by employers. The Government has announced a package of reforms to close a legal loophole used by dishonest employers that short-change employees who make salary-sacrifice contributions to super. Funding for the Taskforce coincides with new data released by the ATO reporting a significant estimated Super Guarantee gap. This gap is the difference between the theoretical amount payable by employers to be fully compliant and actual contributions received by funds. The ATO estimates the net SG gap as 5.2 per cent or $2.85 billion of the total estimated $54.78 billion in SG payments that employers were required to pay in 2014-15. The gap exists because some employers are not meeting their super guarantee obligations either by not paying enough or not paying at all. Employers who deliberately are not paying their workers’ super entitlements are robbing their workers of their wages. The new package aims to take action on this so employers cannot hide from their legal obligation. Some of the measures included in the package involve: A requirement for superannuation funds to report contributions received more frequently (at least monthly) to […]


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Strategies to bulk up your super before retirement

Posted on September 7, 2017 by admin


To retire comfortably, you should be doing everything you can while still in the workforce to make sure your superannuation is as fruitful as possible. Consider the following: Consolidate super into one accountSuper account fees can eat away at your super balance, especially if you have numerous accounts. If you find yourself in this position, take the time to organise your super contributions into the one account to reduce unnecessary and excessive fees. Outstanding super paymentsCheck you have been paid all the super you are entitled to, as well as interest, as this can uncover large amounts of unpaid super. Employers have a legal obligation to pay all employees who have earned more than $450 in the space of a month, and these payments are required to be paid at least quarterly. If you have not been paid what you are owed, you are also missing out on accumulated interest. It is now compulsory for employers to report the super contributions they make, but this was not always the case, meaning you may need to contact previous employers or the ATO to access unpaid super you are entitled to. Salary sacrificeThis is an efficient way to grow your superannuation while […]


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Carrying on a business in an SMSF

Posted on August 30, 2017 by admin


Self-managed super funds can carry on a business providing the business is allowed under the trust deed and operated for the sole purpose of providing retirement benefits for fund members. Carrying on a business through an SMSF does have restrictions that other businesses do not have, such as entering into credit arrangements or having overdrafts. SMSF trustees that carry on a business through their fund must adhere to the sole purpose test. The ATO looks for cases where: the trustee employs a family member the ‘business’ is an activity commonly carried out as a hobby or pastime the business carried on by the fund has links to associated trading entities there are indications the fund’s business assets are available for the private use and benefit of the trustee or related parties The same regulatory provisions still apply to funds that carry on a business, i.e, SMSF investments must be made on a commercial ‘arm’s length’ basis, business activities must be conducted in accordance with the SMSF’s investment strategy, collectables and personal use assets cannot be displayed at the business premises and so on. The SMSF cannot be involved in the following business activities: selling an SMSF asset for less than […]


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Identifying undervalued assets

Posted on August 23, 2017 by admin


Recent research has found that an alarming 31 per cent of SMSF trustees consider choosing investments as one of the hardest aspects of running an SMSF. Value investing is one such strategy that SMSF investors can utilise to boost their portfolios. Value investing involves identifying undervalued assets that have the potential to increase in value over time. These assets are generally priced well below their intrinsic value due to missed expectations, market crashes, cyclical fluctuations and so forth. To identify undervalued assets or asset classes you need thorough analysis and good judgment. Look for asset classes that are inexpensive and backed by news. It is much better to invest in industries where you understand the business dynamics, i.e., how they make their money, underlying conditions and so on. Furthermore, looking for businesses in industries with a sustainable competitive advantage where external factors do not affect them too much is ideal. When evaluating stocks look at companies with a low debt load, are paying steady dividends and have a quality rating that is average or better. Other metrics to consider include: Price-to-earnings ratio: This is a stock’s current share price divided by its annual earnings. A lower ratio indicates it is […]


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Increased access to Superannuation Clearing House

Posted on August 16, 2017 by admin


The ATO has changed the conditions of registration for businesses to access the Small Business Superannuation Clearing House. The Small Business Superannuation Clearing House is a free online service available for small businesses to make super contributions for their employees. The Tax Office is now allowing businesses with 19 or less employees or businesses with an annual aggregated turnover of $10 million or less to use the service. These employers can now make super guarantee contributions as a single electronic payment to the Clearing House and it will then distribute the payments to employees’ funds. The super guarantee contributions count as paid on the date the Clearing House accepts them. Employers have 21 days to pass an employee’s choice of fund to the Clearing House. The Clearing House reduces red tape and compliance costs for small business. In early 2018, the Clearing House will be integrated with other ATO online services in the Business Portal to better serve the growing number of users.


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Increased access to Superannuation Clearing House

Posted on by admin


The ATO has changed the conditions of registration for businesses to access the Small Business Superannuation Clearing House. The Small Business Superannuation Clearing House is a free online service available for small businesses to make super contributions for their employees. The Tax Office is now allowing businesses with 19 or less employees or businesses with an annual aggregated turnover of $10 million or less to use the service. These employers can now make super guarantee contributions as a single electronic payment to the Clearing House and it will then distribute the payments to employees’ funds. The super guarantee contributions count as paid on the date the Clearing House accepts them. Employers have 21 days to pass an employee’s choice of fund to the Clearing House. The Clearing House reduces red tape and compliance costs for small business. In early 2018, the Clearing House will be integrated with other ATO online services in the Business Portal to better serve the growing number of users.


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Understanding SMSF trustee responsibilities

Posted on August 14, 2017 by admin


Self-managed super fund (SMSF) trustees have onerous duties and responsibilities in relation to the management of their fund. An SMSF trustee primarily needs to ensure the fund is properly managed for the benefit of members for their retirement. All trustees must ensure the fund assets are held in trust and invested on behalf of the members. Trustees need to ensure their fund complies with all super rules including super laws and the fund’s trust deed. Trustees must regularly review and update the fund’s trust deed and investment strategy in accordance with the law and the needs of the SMSF’s members. Another responsibility is to accept contributions and paying benefits (income streams and lump sums) in accordance with super laws and the fund’s trust deed. Trustees must also advise the Tax Office of any changes in trustees, directors or members within 28 days of the change taking place. SMSF trustees also have the duty of undertaking various administrative tasks such as lodging annual returns and record-keeping, as well as ensuring an approved SMSF auditor is appointed for each income year. Where a conflict arises between your wishes as a member and your legal responsibilities as a trustee, you must comply with […]


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Understanding SMSF trustee responsibilities

Posted on by admin


Self-managed super fund (SMSF) trustees have onerous duties and responsibilities in relation to the management of their fund. An SMSF trustee primarily needs to ensure the fund is properly managed for the benefit of members for their retirement. All trustees must ensure the fund assets are held in trust and invested on behalf of the members. Trustees need to ensure their fund complies with all super rules including super laws and the fund’s trust deed. Trustees must regularly review and update the fund’s trust deed and investment strategy in accordance with the law and the needs of the SMSF’s members. Another responsibility is to accept contributions and paying benefits (income streams and lump sums) in accordance with super laws and the fund’s trust deed. Trustees must also advise the Tax Office of any changes in trustees, directors or members within 28 days of the change taking place. SMSF trustees also have the duty of undertaking various administrative tasks such as lodging annual returns and record-keeping, as well as ensuring an approved SMSF auditor is appointed for each income year. Where a conflict arises between your wishes as a member and your legal responsibilities as a trustee, you must comply with […]


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ATO targeting SMSF non-compliance

Posted on August 2, 2017 by admin


The Tax Office is warning SMSF trustees that they will be contacting SMSFs that have not regularly complied with their lodgment obligations. The ATO is reminding trustees that lodging an SMSF annual return is an obligation and failure to do so is a breach of super laws. To avoid penalties, the Tax Office is urging SMSF trustees to bring their lodgments up to date as soon as possible. Trustees who cannot meet any deadlines will risk becoming disqualified as a trustee for persistent non-lodgment, their SMSF may be made non-compliant and the ATO will raise default assessments.


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How does the super guarantee charge work?

September 20, 2017

Employers who do not pay the minimum amount of super guarantee for their employee(s) by the due date may have to pay the super guarantee charge (SGC).

The charge is made up of super guarantee shortfall amounts including any choice liability calculated on your employee’s salary or wages, interest on those amounts (currently 10 per cent) and an administration fee ($20 per employee, per quarter).

Employers must report and rectify the missing payment by lodging an SGC statement by the due date and paying the SGC to the ATO. Employers may be able to use a late payment to reduce the amount of SGC, however, they must still lodge an SGC statement and pay the balance of the SGC to the ATO.

The ATO prioritises the collection of unpaid SGC debts. If an employee reports an employer for unpaid super, the ATO will investigate on their behalf.

Employers must lodge their SGC statement and pay the charge by the due date.

Quarter Period Due date
1 1 July – 30 September 28 November
2 1 October – 31 December 28 February
3 1 January – 31 March 28 May
4 1 April – 30 June 28 August

If a due date falls on a weekend or public holiday, the payment can be made the next working day.

Once the statement has been lodged and the SGC is paid, the ATO will transfer the super guarantee shortfall amount and any interest to the employee’s chosen super fund.