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Edited version of your written advice
Authorisation Number: 1012988498948
Date of advice: 1 April 2016
Advice
Subject: Superannuation guarantee
Question
Is the employer required to provide superannuation guarantee support to an employee who is not an Australian resident?
Advice
Yes, however only for the relevant period the employee is working in Australia.
This advice applies for the following periods:
Financial year ending 30 June 2016
Financial year ending 30 June 2017
Financial year ending 30 June 2018
The arrangement commences on:
1 July 2015
Relevant facts and circumstances
Your advice is based on the facts stated in the description of the scheme that is set out below. If your circumstances are significantly different from these facts, this advice has no effect and you cannot rely on it. The fact sheet has more information about relying on ATO advice.
The employer applied for administrative binding advice regarding whether the employer has to provide superannuation guarantee (SG) support to one of its employees.
The employer is an Australian entity.
The employer has an employee who is a non-resident of Australia.
The employee comes to Australia to work for a week once or twice a year.
The employee's role is not a full-time role.
The employee works with the employer via telephone at other times of the year.
Relevant legislative provisions
Superannuation Guarantee (Administration) Act 1992 subsection 6(1)
Superannuation Guarantee (Administration) Act 1992 section 12
Superannuation Guarantee (Administration) Act 1992 section 15C
Superannuation Guarantee (Administration) Act 1992 section 19
Superannuation Guarantee (Administration) Act 1992 section 27
Superannuation Guarantee (Administration) Regulation 1993 subregulation 7(1)
Reasons for decision
Summary
The employer must provide superannuation guarantee (SG) support on the proportion of the payments for the period in a quarter of a financial year in which the employee is working inside Australia.
Detailed reasoning
All employers are required to provide a minimum level of superannuation support for their eligible employees by the SG period due date. Employers must use ordinary times earnings (OTE) as the earning base to calculate the minimum SG contributions required for employees.
Ordinary time earnings
OTE, in relation to an employee, is defined in subsection 6(1) of the Superannuation Guarantee (Administration) Act 1992 (SGAA) and is the lesser of:
(a) the total of the employee's earnings in respect of ordinary hours of work and earnings consisting of over award payments, shift loading or commission, but does not include lump sum payments made on termination of employment in lieu of unused sick leave, unused annual leave and unused long service leave; or
(b) the maximum contribution base for the quarter - the maximum contribution base, which is the maximum limit on the amount of superannuation support that an employer is expected to provide for the benefit of an employee. The maximum contribution base for the 2013-14 year of income is $48,040 per quarter. This amount is indexed annually according to the indexation factor.
Employers are deemed to make a calculation under section 19 of the SGAA each quarter of a financial year to ensure they are providing sufficient SG support to their eligible employees, and are therefore not liable for SG charge in relation to the salary and wages of their eligible employees.
Subsection 27(1) of the SGAA provides that certain salary or wages are not to be taken into account for the purpose of making a calculation under section 19 of the SGAA, including at subparagraph 27(1)(d)(i), salary or wages paid to an employee who is not a resident of Australia for work done outside Australia (except to the extent that the salary or wages relate to employment covered by a certificate under section 15C).
In your case
The SGAA requires that eligible employees receive SG support unless there is an exclusion under the SGAA or the SGAR. Payments by the employer are included in the OTE, as well as salary and wages of an employee for the purposes of the SGAA.
The employee is a non-resident of Australia. They only visit Australia to work for one or two weeks a year.
On the basis of the information provided, the employee is not a 'prescribed employee' of the employer for the purposes of the SGAA.
The employer has not provided evidence to indicate they have an SGAA section 15C certificate of coverage for this non-resident employee. Accordingly, on the basis of the information provided, the employer does not have to provide SG support on the proportion of the payments made to the employee for the quarters of each financial year the employee is working outside Australia.
However, as the employee is not a prescribed employee for the purposes of the SGAA, the employer must provide SG support on the proportion of the payments made to the employee for the period in a quarter of each financial year the employee is working inside Australia.