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Simplifying and reducing the harshness of the superannuation guarantee charge

21 August 2015 | Exposure Draft

On 20 January 2015, the Minister for Small Business, the Hon Bruce Billson MP, announced changes to simplify and reduce the harshness of the superannuation guarantee (SG) charge. These changes will apply from 1 July 2016.

Under the Superannuation Guarantee (Administration) Act 1992 (SGAA), employers must make quarterly SG contributions for their eligible employees to avoid having to pay the SG charge to the Australian Taxation Office. The SG charge regime imposes punitive costs to deter employers from paying their SG contributions late or in part. This can have a significant impact on small businesses.

As a part of announced changes, the SG charge will be simplified by aligning the earnings base for calculating the SG charge (currently total salary and wages) with the earnings base for calculating SG contributions (ordinary time earnings).

The changes will also reduce the harshness of the SG charge by aligning the interest component on any SG shortfall with the period contributions are outstanding. These changes will also remove the additional penalties under the SGAA and align them with the administrative penalties under the Tax Administration Act 1953.

Treasury is now seeking comments from interested parties on the proposed legislation and the accompanying explanatory memorandum to implement this announcement.

These changes complement two other measures to reduce small business superannuation compliance costs; expansion of the small business superannuation clearing house and simplifying when a standard choice form must be provided by an employer. Both of these changes have applied since 1 July 2015.

Submissions closed on Friday 18 September 2015

Key Documents

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