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Superannuation – should you pay it before the end of financial year and other items to consider

We have compiled series of frequently asked questions in regards to your super below.

Due dates for superannuation guarantee (June quarter)

The official due date for the June quarter super is 28th July, in fact super is required to be paid at least quarterly, within 28 days after the end of each quarter.

You may decide to make more regular payments to assist your cash flow but this is not required by law.

When do you get a deduction for super?

Remember, you only get a deduction for super WHEN it is paid. It also must be paid by the due dates. This means, that even though you don’t need to pay your June quarter super until 28th July, you will not get to claim a deduction for it unless it is paid prior 30 June. If paid between 30th June and 28th July, it is deductible in the following financial year.

You need to consider this when estimating your tax for the year as there may be instances when your financials can be showing a loss yet you will be liable to pay income tax due to unpaid super at year end.

When is the superannuation paid?

For the super to be considered PAID, it must hit the employees’ superannuation account. As a result, you need to allow for processing time which can be up to 5 business days.

For example, if you want to ensure your super is considered to be paid by 30th June, you should process the payment by the 25th June.

What are employer obligations when super due dates are not met?

If you haven’t paid the minimum amount on time and to the correct fund, you may have to lodge a Superannuation guarantee charge statement and pay the superannuation guarantee charge (SGC).

Moreover, you will not be able to claim a deduction for super paid late and you are more likely to get audited by the ATO.

What are your super limits?

There are various thresholds that apply to super but we will only talk about concessional contributions cap now. This includes employer contributions (including those under salary sacrifice arrangements) and personal contributions claimed as a tax deduction by a self-employed person (or any person from 1 July 2017).

Income year Amount of cap
2016/17  $30,000
2017/18  $25,000

If you were 49 years or over on the 30th June 2016, you were allowed a temporary higher cap of $35,000. This will be abolished from 1 July 2017 which means 2017 may be the last year you are able to claim a higher super deduction.

Income year Amount of cap Age of taxpayer
2016/17  $35,000 49 yrs or over on 30 June 2016
2017/18  $25,000 All ages

How do these superannuation caps work?

The ATO does not consider what is reported for you by the employer in relation to super caps. Instead, they receive the information directly from your superfund, advising them exactly how much the fund received for you (the employee) during the relevant financial year.

You can find more information on ATO website – https://www.ato.gov.au/Individuals/Super/In-detail/Withdrawing-and-paying-tax/Excess-contributions-tax-and-how-funds-report-your-contributions/

Not paying super regularly and on time and then paying it all in lump sum to catch up may therefore cause some employees exceed the cap which has adverse tax consequences for them. You should check with your superfund first before changing your salary sacrifice arrangements to ensure that the super goes into your fund in the correct year.

What are the ATO tips to avoid exceeding the concessional contributions cap?

  • Be aware what your concessional contribution cap is.
  • Keep track of the amount of contributions you, your employer or others make on your behalf.
  • Check when your employer pays the contributions and when they were received by your super fund – contributions count towards a cap in the year your super fund receives them.
  • If you have more than one job or pay money into more than one super fund, include all of them when working out your annual contributions.
    Remember: compulsory employer contributions are included as part of your concessional contributions.
  • If you think you may go over your concessional contributions cap in the current financial year
    • stop or reduce any pre-tax voluntary contributions to your super – however, your employer can’t change compulsory super guarantee amounts or amounts paid under a contract or industrial agreement
    • delay making any personal super contributions you intend to claim as a deduction in your tax return.
  • Check if your employer pays costs, such as super administration fees and insurance premiums on your behalf to your fund – these amounts count towards your concessional contributions cap.
  • If you are eligible to claim an income tax deduction for your personal super contributions, only the amount we allow as a deduction will count towards your concessional contributions cap.

 Superannuation rules are very complex so don’t hesitate to give us a call on 07 3160 7386 if you are unsure whether you are doing the right thing for yourself or your employees.

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