Medical Professionals and Clients With Multiple Jobs Impacted by New Rules for Payment of Employer Superannuation
New rules introduced recently allow certain high-income earners to opt-out of receiving Superannuation Guarantee Charge (SGC) on their wages from some of their employers.
This will help avoid unintentionally breaching the superannuation Concessional Contributions cap which is an issue for professions such as doctors, health professionals, and people that have multiple jobs with different employers.
You may be eligible to opt out if you:
- Have more than one employer, and
- Expect your employers’ mandated superannuation contributions to exceed your concessional contributions cap for a financial year.
Broadly, an employer’s SGC obligation are calculated using an employee’s ordinary time earnings (OTE) up to a maximum contribution base. The maximum amount of SGC payable by an employer is currently 9.5% of the maximum contribution base for the relevant quarter per employee. An employer is not obliged to make SGC contributions on an employee’s earnings over and above this base figure (currently $55,270 per quarter for the 2019-20 financial year).
Where an individual has more than one employer, each employer typically has an obligation to pay SGC contributions up to this maximum contribution base. As a result, some employees with relatively high incomes may find that their compulsory SGC contributions exceed their concessional contributions cap.
Under the previous rules, there was no mechanism to reduce SGC contributions in these situations.
SGC and Multiple Employers – Opting Out
Once the Australian Tax Office (ATO) establishes the required approved forms and procedures, certain individuals with multiple employers will be able to apply to the ATO for an employer shortfall exemption certificate.
An employer covered by such a certificate will not be liable for SGC charge (or face other penalty consequences under the SGC legislation) if they do not make contributions on behalf of their employee for a quarter covered by a certificate – that is, the maximum contribution base for the employee will be reduced to nil for the relevant quarter(s).
More details about the rules, the process, and forms are available HERE