|
||||
SuperUpdate September 2007 |
||||
 |
||||
Calculate super using ordinary time earnings
From 1 July 2008, you must use ordinary time earnings, as defined in the super guarantee law, to calculate super guarantee contributions for your employees. This ensures all employees are treated the same for super guarantee purposes.
Ordinary time earnings are generally what employees earn for their ordinary hours of work, including:
- over-award payments
- commissions
- shift allowances, and
- paid leave.
Ordinary time earnings does not include overtime.
This means from 1 July 2008, you cannot use an earnings base to calculate your super guarantee contributions which is based on:
- an industrial award
- an existing employment agreement
- a fund’s trust deed, or
- a law of the Commonwealth, States or Territories.
|
For more information on what is included or excluded from ordinary time earnings, refer to Using ordinary time earnings to calculate the super guarantee. |
- Check to see if you’re using an earnings base other than ordinary time earnings to calculate your super contributions. If the amount you pay is less than the minimum 9%, you will have to increase this amount to meet the minimum to avoid the super guarantee charge.
- Think about building the increased super guarantee contributions into your workplace bargaining processes and payroll system now to be ready for 1 July 2008.
- Start using ordinary time earnings for all your employees from 1 July 2008.
Insurance risk only members’ TFN requirements
Funds can generally only accept contributions made by a member who has quoted their tax file number (TFN) to the fund. Funds must return member contributions within 30 days of becoming aware that the member has not quoted their TFN unless the member provides their TFN within 30 days of the contribution.
However, there are transitional rules for members who only have an insurance risk interest in a superannuation fund, such as a death or disability entitlement. The Australian Prudential Regulation Authority (APRA) recently announced these transitional rules for regulated funds (not including self managed super funds). Under the transitional rules, where a member’s only interest in a fund is an insurance risk interest, the fund has a longer period (i.e. until 31 December 2007) to return member contributions if it does not have the member’s TFN.
If they don’t have the member’s TFN by 31 December 2007, the fund must return the contributions to the person or entity that paid them. The contributions returned can be reduced to take account of the period of cover provided by the insurer prior to the refund of the premium.
|
For more information, refer to the APRA website. |
New withholding variation for members turning 60 this year
In the July edition of SuperUpdate, we advised you of a new withholding variation that funds needed to apply to the withholding rates for their members who turn 60 during the 2007-08 financial year.
Unfortunately there was an error in the formulas contained in this variation, so we have issued a new withholding variation. This revised variation is based on formulas that more accurately estimates the final tax liability for these members.
To help, we have also provided look up tables. These show the amount that the normal rate of withholding should be reduced by in the year of a member’s 60th birthday.
Payers and software developers should implement this new variation as soon as possible. If you are not able to implement these changes immediately, we will not charge you any penalties.
Private sector super funds – reporting and paying unclaimed super
As part of the changes to super this year, private sector super funds must pay their unclaimed super money to the Australian Government.
From 1 July 2007, private sector funds are required to report and pay their unclaimed super for the half-year ending 30 June 2007 and later half-years to the Tax Office rather than to their state or territory authority.
As a result of the removal of compulsory cashing of benefits at age 65, the meaning of unclaimed super has changed. From 1 July 2007, for an amount to be unclaimed super it no longer has to be immediately payable to a member.
What is unclaimed super from 10 May 2006 to 30 June 2007?
For the period 10 May 2006 to 30 June 2007, a benefit is only unclaimed super if:
- the member was deceased, or
- it was immediately payable when the member turned age 65, under their fund’s governing rules.
What is unclaimed super from 1 July 2007?
Unclaimed super is a super amount payable for a member of a fund where ALL of the following conditions are met:
- the member has reached the eligibility age of 65 years, for both males and females, and
- the account has been inactive for at least two years, and
- five years after last having had contact with the member, the fund is unable to contact the member despite making a reasonable effort.
Unclaimed super is also an amount payable in respect of a member of a fund if:
- the member has died, and
- the member is eligible for a benefit (other than a pension or annuity) that is payable immediately under the rules of the fund or by operation of law, and
- the super account has been inactive for at least two years, and
- the fund cannot ensure the benefit will be paid to the person entitled to it.
|
For more information about how to report and pay unclaimed super, refer to Unclaimed super – information for funds. |
|
Private sector funds with unclaimed super for the half year ending 31 December 2007 must lodge their reports and forward unclaimed money to the Tax Office by 30 April 2008. |
Report your lost, found and transferred members
Remember to report your lost, found and transferred members for the first half of 2007 (1 January to 30 June) by 31 October 2007.
To meet your reporting obligations, lodge either a:
- lost member register report in the approved electronic format described in the electronic media specification version 4.0, or
- lost members register non-lodgment advice form (NAT 3797) if you had no new lost, found or transferred members for this period.
Remember:
- If you don’t lodge a lost member report, you may incur a penalty.
- The reporting rules apply to all regulated super funds, ADFs, ERFs and RSA providers.
- Self managed super funds do not need to report.
When reporting lost members you must only report new lost members.
Information to report
When reporting:
- lost members, include information on new lost members such as their TFN
- found members, include members previously reported as lost, but have since been found, and
- transferred members, include members previously reported as lost whose benefits were transferred out of the fund as a lost member.
Winding up a fund?
If your fund is winding up:
- report to us that the lost members have been transferred, and
- advise the new fund that the transferred member is a lost member.
The new fund must also report to us that the transferred member is a lost member.
|
For more information about lost, found or transferred members, or how to lodge your report refer to lost members – superannuation fund. |
Super transfers – personalise the portability form
The Request to transfer whole balance of superannuation benefits between funds (NAT 71223) form (also known as the portability form) can be used to transfer benefits between funds.
Treasury (who hold copyright) have advised that you can print the form after applying your own logo in place of the existing Commonwealth of Australia coat of arms.
|
You must not use your logo together with the existing coat of arms. |
|
To obtain a copy of the form:
|
To obtain a printable electronic version of the form, email us at OPSSUPERCRT- RUNDLE@ato.gov.au.
About SuperUpdate
SuperUpdate is a monthly electronic newsletter issued to those working in the superannuation industry. It includes information about superannuation issues and changes in the administration of Australia’s superannuation system. The newsletter provides summary information and directs readers to other sources for highly technical or more detailed information.
Subscribe
You can be notified when the latest issue of SuperUpdate is published on our website by using the free email update service.
Let us know what you think
We welcome your feedback and suggestions about how we can make SuperUpdate work better for you.
Last Modified: Monday, 17 September 2007
Relying on our information - our commitment to you
We are committed to providing you with advice and guidance you can rely on, so we make every effort to ensure that what we give you is correct.
If you follow our advice or guidance and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we will take that into account when determining what action, if any, we should take.
Some of the advice and guidance on this website applies to a specific financial year. This is clearly marked. Make sure you have the information for the right year before making decisions based on that information.
If you feel that our advice and guidance does not fully cover your circumstances, or you are unsure how it applies to you, contact us or seek professional advice.
Copyright
© Commonwealth of Australia
This work is copyright. You may download, display, print and reproduce this material in unaltered form only (retaining this notice) for your personal, non-commercial use or use within your organisation. Apart from any use as permitted under the Copyright Act 1968, all other rights are reserved.
Requests for further authorisation should be directed to the Commonwealth Copyright Administration, Copyright Law Branch, Attorney-General’s Department, Robert Garran Offices, National Circuit, BARTON ACT 2600 or posted at http://www.ag.gov.au/cca.