|
Changed Earnings Base Definition for Superannuation |
From 1 July 2008, as part of the Government"s plan for "simpler Superannuation", "ordinary time earnings" (OTE) will become the only earnings base used to calculate the superannuation guarantee obligations of all employers. This means that any employers using alternative earnings bases (such as "superannuation salary" in a relevant award or trust deed) will need to adopt OTE as their earnings base from 1 July 2008.
What do you need to do?
Prior to the 1 July 2008 transition date employers should review the earnings base for all employees to ensure you are calculating your super contributions based on ordinary time earnings. If you are not using OTE as your earnings base, your superannuation guarantee contribution obligations may increase from 1 July 2008, especially as certain employee allowances may fall within the definition of OTE.
Why the change?
Superannuation guarantee legislation was introduced in 1992 to introduce a minimum requirement for employers' superannuation contributions. This legislation referred to the use of a "notional earnings base" (NEB) for the calculation of an employer's superannuation guarantee obligations in certain cases. As a result, some employers currently pay superannuation on an earnings base that existed before the super guarantee was introduced. This means an employee may be paid lower super contributions (as a proportion of total remuneration) when compared with another employee in similar circumstances.
The new law standardises the earnings base to ordinary time earnings (OTE) for all employees.
For more information, please visit this page on the ATO website
|
