ATO Interpretative Decision
ATO ID 2002/308 (Withdrawn)
Superannuation
Superannuation Guarantee Scheme: Calculation of an employer's individual shortfall.FOI status: may be released
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This ATO ID is withdrawn as it is superseded by Superannuation Guarantee Ruling SGR 2009/2.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Must the Commissioner use salary and wages in calculating an employer's individual shortfall as opposed to ordinary time earnings?
Decision
Yes. Section 19 of the Superannuation Guarantee Administration Act 1992 (SGAA), the shortfall component of the Superannuation Guarantee Charge (SGC) is calculated based on the employee's 'total salary or wages' for the year and not the employees 'notional earnings base'.
Facts
The taxpayer is an employer who made insufficient superannuation contributions to a complying superannuation fund for its employees in relation to a year of income.
The employer questions why the Commissioner calculated the individual shortfall on their employees' total salary and wages instead of their ordinary time earnings as this is what they had based their calculations on.
Reason for Decision
Under the SGAA, an employer must make at least minimum superannuation contributions in relation to an employee to avoid becoming liable to any SGC. This minimum level of contributions is calculated by reference to the employee's 'notional earnings base'. In broad terms, notional earnings base is the earnings of the employee by reference to which the employer contribution is calculated under an award, law, occupational superannuation arrangement or superannuation scheme. If no other notional earnings base is applicable, than the notional earnings base in relation to the employee is the employees' 'ordinary times earnings'.
If however, the employer does not make the required amount of superannuation contributions on behalf of their eligible employees by the due date, the employer will be liable to pay the SGC for the year in which the shortfall occurred. Pursuant to section 19 of the SGAA, the shortfall component of the SGC is calculated based on the employee's 'total salary or wages' for the year and not the employees notional earnings base.
Date of decision: 19 July 2001
Legislative References:
Superannuation Guarantee (Administration) Act 1992
Section 19
Keywords
Superannuation guarantee charge
Superannuation guarantee penalties
Superannuation guarantee shortfalls
ISSN: 1445-2782
| Date: | Version: | |
| 19 July 2001 | Original statement | |
| You are here | 5 February 2010 | Archived |
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