Superannuation is an obligation every business owner needs to fulfill. It includes paying the super contributions for eligible employees and it is also the employees’ key incentive area. There are problems that you will encounter with superannuation especially when it comes to generating report of pay cycle and bulk payments. Once payment for super contributions has been made, it is necessary to update employee records, which are related to superannuation. You need to make sure that you are following the correct process so you can prevent problems, which are related to superannuation compliance.
Superannuation mistakes to avoid
- Not passing on the employees’ TFN to their super fund
- Error recovery
- Not taking note of the due date
- Not understanding when the super should be paid for workers
- Not paying the required amount of super for employees
Rules that can help prevent committing these mistakes:
- See to it that you pay your employees’ superannuation guarantee
Eligible employees need to have a compulsory contribution or also referred to as Super Guarantee contribution. This is paid directly to the nominated super fund of employees. Employer should make it a point to pay the Super Guarantee contributions. The contribution is the percentage of the employee’s regular income. The rate set by the Australian Government as of 2015-16 is 9.5% of the regular income.
- Calculate the income of your employees correctly
The Super Guarantee contributions are based on the employees’ income. With that said, employers need to be accurate with calculating the income. This is due to the fact that the contributions are set as a percentage of regular Ordinary Time Earnings. The regular wage includes shift loadings, allowances, commissions and paid leave.
- Never influence your employee’s choice of fund
If you do not hold a Financial Services Licence, you should not attempt to make changes to the choice of fund of your employees. The employee should be the person to determine how to join a fund or to get product information. In case the employees needs to obtain additional information regarding the choice of fund, the employer should direct them to the government websites. The website will also allow employees to make a comparison of different super funds.
Cut-Off Dates For Superannuation
When it comes to paying superannuation contributions, the employer must also be aware of the cut-off dates. The contributions are paid at least four times a year on a quarterly basis. For the 1st quarter, which covers July 1 to September 30, the cut-off date is set on October 28. For the 2nd quarter which covers the period October 1 to December 31, January 28 will be the cut-off date. For the 3rd quarter covering January 1 to March 31, April 28 will be the cut-off date. For the 4th and final quarter covering April 1 to June 30, the cut-off date will be on July 28.