On 1 July 2021, the super guarantee rate will rise from 9.5 per cent to 10 per cent. Some pay periods will cross over between June and July when the rate changes.
The ATO advises that the percentage employers are required to apply is determined based on when the employee is paid, not when the income is earnt.
The rate of 10 per cent will need to be applied for all salary and wages that are paid on and after 1 July 2021, even if some or all of the pay period it relates to is before 1 July 2021.
That means, if the pay period ends before 30 June, but the pay date falls on or after 1 July, the 10 per cent rate applies on those salary and wages which are ordinary time earnings. The date of salary and wage payment determines the rate of super guarantee payable, regardless of when the work was performed.
The tax office is in the process of reviewing a number of cases where it appears taxpayers are inappropriately using their superannuation funds to minimise or avoid paying tax.
Late last week, the ATO issued a taxpayer alert indicating it is reviewing arrangements where individuals divert their personal services income to an SMSF to minimise or avoid tax.
The arrangements under review are typically used by SMSF members at or approaching retirement age as income received by the SMSF trustee is concessionally taxed or treated as exempt current pension income of an SMSF in pension phase.
“In other words, the SMSF member purportedly avoids paying tax on their income at the marginal tax rate,” said deputy commissioner James O’Halloran.
“Under these arrangements an individual performs services for a client for which the individual does not directly receive adequate remuneration for the service provided. Instead the client refers remuneration for the service to a company, trust or other non-individual entity. The entity then distributes the income to an SMSF, of which the individual is a member, as a return on investment,” Mr O’Halloran said.
The ATO are currently undertaking reviews of a number of cases involving arrangements of this type and will be engaging with taxpayers whose affairs concern them over the coming months.