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March 25, 2012

Compulsory super contributions increased

The Superannuation Guarantee (Administration) Amendment Bill 2011 has been passed by both Houses.

Under the current scheme, all employers are required to make a prescribed minimum level of superannuation contributions to a complying superannuation fund or a retirement savings account (RSA) on behalf of their eligible employees.The Bill increases the Superannuation Guarantee charge from 9 percent to 12 percent of an employee’s ordinary time earnings.

The Superannuation Guarantee charge percentage will be increased to 9.25% on 1 July 2013, 9.5% on 1 July 2014, 10% on 1 July 2015, 10.5% on 1 July 2016, 11% on 1 July 2017 and 11.5% on 1 July 2018. On 1 July 2019 the rate will be set at 12 per cent for 2019-20 and subsequent income years.

The maximum age limit of an employee at which the superannuation guarantee no longer needs to be provided is also abolished. Currently employers are required to contribute to complying superannuation funds of eligible mature age employees aged 70 and older.This Bill removes the SG maximum age limit of 70 and requires employers to contribute to complying superannuation funds of eligible mature age employees aged 70 and older.

The amendments commence on 1 July 2013. They were dependent on the passing of the Minerals Resource Rent Tax package.

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Posted 25th March 2012 by David Jacobson in Superannuation, Tax