Mr Taxman
Change the way you feel about taxes.
Get informed and discover what the taxman doesn't want you to know.
Sharing it with Australia, Mr Taxman is a regular Woman’s Day columist and TV finance commentator
  • click to visit Mr Taxman on Twitter
  • click to visit Mr Taxman on FaceBook
  • rss

Is Super Compulsory?

Jul 17, 2011

What is the least amount of superannuation you can pay? Can you email payroll and decide to not pay super anymore?

As a young property investor, I’m intending to be financially secure well before my superannuation would be released to me and may not even need it. I’ve recently taken up a contract role with a significant increase in pay (still as a PAYG employee), and now I’m paying nearly $250 a week in super. What I’d really like to do is use that money in my property investing to pay off my debt faster. What is the legal requirement, and how can you request a change to the level?

I looked into a Self Managed Super Fund, but I only have $70.000 in super at the moment so it isn’t really viable.

I had the very same query back in 1992 when compulsory super was first introduced when I was a lowly-paid university student and every dollar counted! 

When you are employed, your employer must pay super, known as superannuation guarantee (SG) contributions, on your behalf into a complying super fund.   SG contributions are paid every quarter by your employer at a minimum of 9% of your “ordinary time earnings”, up to the “maximum contribution base”. 

You are only entitled to have SG contributions paid on your behalf from your boss if you are between 18 and 69 years old and you are paid $450 or more before tax in a month.  It doesn’t matter whether your employment status is fulltime or casual nor if you’re only a temporary resident of Australia.  Those under 18 you must work more than 30 hours per week in order to be entitled have super contributions paid on their behalf.

The maximum contribution base limits the maximum amount of super support that employers have to provide each quarter. It’s indexed annually.  For the 2010/11 year the limit is $42,220 per quarter (equivalent to an annual salary of $168,880).  Your employer doesn’t have to pay SG contributions for any earnings above this limit.

Ordinary time earnings are used to work out any SG contributions payable for employees.  They are usually what you earn during ordinary hours of work and include allowances, bonuses, commissions and any over-award payments.  Ordinary time earnings exclude annual leave loadings, expense reimbursements and any overtime payments.

Over the next decade, the SG is being increased commencing with a 0.25% increase in the 2013-14 and 2014-15 years, followed by 0.5% rises each financial year until the SG reaches 12% in 2019/20.

The thing to remember is that the super is still your money, albeit in a different investment vehicle.  I despised compulsory super back in 1992 but twenty years’ on I am extremely grateful that a start was made to my future retirement.

If you are unsure if you are receiving the correct amount, then you can go to my website www.mrtaxman.com.au for an employee superannuation guarantee tool to determine your eligibility for the SG.

 

This article first appeared in the June 2011 issue of Your Investment Property Magazine www.Yipmag.com.au. Copyright Key Media Pty Ltd 2011.

Tags: EmployeesEmployersPersonal taxSMSFSuper

Author: Mr Taxman

Comments

Post a New Comment

Media Availability

Are you interested in booking Mr Taxman for a speaking engagement or requesting his viewpoints for an article?

comments-rhsLatest Comments

  • "Unfortunately Natalie you are doubling up the extra tax taken out each fortnight with the year end assessment notice. Only the amount shown in the assessment is actually offset against your HELP..."

    By: Mr Taxman at Apr 24, 2017 11:45AM

    Post: Two important dates for those with HECS/HELP debts

  • "If you are under the repayment threshold each year then no repayment. Note that in last year's Federal Budget that the governmet intends on asking for repayment of HECS/HELP debts for non-residents..."

    By: Mr Taxman at Apr 24, 2017 11:43AM

    Post: Two important dates for those with HECS/HELP debts

  • "I have a HECS debt from 1998 that I have never repaid as I moved to UK in 2000 and unexpectedly stayed! Will this debt ever need to be repaid if I continue living in UK? If I return to Oz to..."

    By: Steve at Apr 23, 2017 8:26AM

    Post: Two important dates for those with HECS/HELP debts

  • "Hi Mr Taxman, I have been looking into my HECS debt because I feel that I should have paid it off by now. In 2011 the debt was at $21 399. I started working full time in 2013 and have been paying..."

    By: Natalie at Apr 20, 2017 9:06AM

    Post: Two important dates for those with HECS/HELP debts

  • "I suggest that you find a way to get the figures as any share of negative gearing losses you could claim in future tax returns once you start earning an income again. "

    By: Mr Taxman at Apr 17, 2017 3:21AM

    Post: Marriage