Simpler Super puts onus on employees
BT Financial Group has warned individuals to be aware that the new simpler super laws have placed the onus of monitoring the level of superannuation contributions they make onto them and away from the employer, as was previously the case.
In particular, BT has advised employees to make sure any salary sacrificing arrangements or channelling of potential performance bonuses into superannuation does not occur in such a manner as to result in a breach of the Concessional Contributions Cap, set at $50,000 for the 2007-08 tax year.
Any breach of this cap will result in individuals having to pay an excessive tax to the Australian Taxation Office, which is levied at 31.5 per cent.
BT Financial Group senior technical manager, technical services, Lucas McKay said people should pay close attention to situations where they have a salary sacrifice arrangement in place and then receive an increase in remuneration, as the higher salary level can easily result in a cap breach.
McKay said bonuses provided had the potential to cause the greatest problems in terms of Concessional Contributions Cap breaches because the amount of the bonus is never known until it is awarded.
“The point we wanted to highlight is the flow of SG (super guarantee) money into superannuation can’t stop, so members and individuals need to be very careful, especially around bonus time and around times when they are receiving salary changes, that they leave enough space in the rest of the financial year so their contributions won’t inadvertently go over the cap,” McKay said.
In regard to bonuses, McKay suggested that under the new rules employees might have to try to change the way their employers actually pay their bonuses.
“Some employers only allow a percentage [of bonus as a superannuation contribution] and some employers will allow you to cap it. So when it comes to bonus time individuals need to look at the options they have to salary sacrifice bonuses, and to make sure they’ve got the option or employers offer the option to cap those at a certain dollar level so the rest of the money will come in as taxable income,” he said.
Recommended for you
After seven years at the company, Iress’ chief technology officer for wealth management APAC, Anthony Gerrits, has departed as the firm commences a search process to fill the role.
With advice firms thinking about scaling up in 2025, research has detailed the main avenues financial advisers say they have used for successful recruitment.
The board of Insignia Financial has reached a decision regarding the possible acquisition of the firm by US private equity giant Bain Capital.
Six of the seven listed financial advice licensees have reported positive share price growth in 2024, with AMP and Insignia successfully reversing earlier losses.
