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

  • "Hello Everybody, My name is Mrs.Juliet Quin. I live in Canada and i am a happy woman today? and i told my self that any lender that rescue my family from our poor situation, i will refer any..."

    By: juliet quin at Mar 26, 2015 9:03AM

    Post: 13 common GST mistakes

  • "Hello, I am a agency nurse. I did not have a normal workplace. I work in different hospital every day. Could I claim the car expenses between my home and workplace. Thanks. "

    By: Elsa at Mar 25, 2015 10:46PM

    Post: Claiming car expenses

  • "I have a CGT question. a married couple live in the family home in the wives name. Another property is purchased by the husband in his name. The husband moves into the 2nd property for 6..."

    By: lisa at Mar 15, 2015 8:00AM

    Post: Marriage

  • "Hi Mr Taxman. I have been paper FX trading and I am finally come good. A very general question and I apologise if it has already been asked. In terms of tax, say if I made a gain of 200,000 AUD in..."

    By: Richard at Mar 15, 2015 3:09AM

    Post: Foreign currency trading

  • "Good Day !! I am Hwa Jurong, a Reputable, Legitimate & an accredited money Lender. I want to use this medium to inform you that i render reliable beneficiary assistance as I'll be glad to..."

    By: Hwa Jurong at Mar 10, 2015 6:53AM

    Post: 13 common GST mistakes