Accommodating Exemption Rules and Limits

Although it is mandatory for employers to pay super contributions for each employee, the following exemptions exist:

  • Employees who earn less than 450.00 AUD in a month.

  • Employees who are 70 years old or over.

  • Employees who are under 18 years old and work 30 hours or less in a week.

  • Employees paid to do work of a domestic or private nature for no more than 30 hours a week.

  • Nonresident employees paid for work done outside Australia.

  • Resident employees paid by nonresident employers for work done outside Australia.

  • Some foreign executives who would have been eligible for the previous class 413 (executive, overseas) visa or entry permit under Migration (1993) regulations.

  • Employees who so elect because the benefit exceeds the pension reasonable benefits limit.

Only the first three rules are delivered with this country extension, because the other rules can be accommodated using the standard core employee earnings and deductions assignment functionality.

Because some employers still process super contributions for employees who fall into the first three of the exemption rules listed in the previous section, you need a way to specify whether the checks and limits apply or not. You achieve this using variables as supporting element overrides.

Legislation provides an earnings ceiling that limits the amount an employer is required to contribute. This ceiling is indexed each year and as of July 1, 2009 was 40,170.00 AUD per quarter. Employers do not have to apply the limit, and they can continue to contribute for the employee's super.

The following table shows the reduced amount payable in the third month because the quarterly limit is reached in that month. The SG contribution is based on 9 percent in this example.

Month

Earnings

SG Calc'd On

Cumulative Amount / Month

SG Contribution

January

10,000

10,000

10,000

900

February

20,000

20,000

30,000

1800

March

10,000

5,240 (35,240 – 30,000)

35,240

471.60

This limit check is part of the SGCMAN deduction calculation. Variables determine whether the check occurs and the maximum limit. If the check occurs, the system verifies the employee's quarter-to-date gross earnings against the quarterly limit.

These limits apply to employers claiming deductions from company tax liability for contributions made on behalf of their employees. You can have the system validate the total super deductions that an employer has paid for the employee against an age-related limit provided by the Australian Tax Office (ATO). A company might use this validation to restrict an employee's salary sacrifice deductions—because it cannot claim tax deductions for contributions above these limits.

Different age groups have different limits. These limits are indexed every year.

A user-maintained bracket, SUP BR AGEBSD LMT stores this data.

Note: When you set the variable as a supporting element override to control this check, you must make sure that this deduction adds to the year-to-date (YTD) accumulator that the system uses for the validation. If the YTD accumulator is equal to the limit based on the employee's age, the system does not resolve the super contribution.

The system uses a separate deduction code to resolve the amount necessary to adjust the super contribution.

Supporting element overrides, set as variables at the deduction level, determine whether the checks occur and the limits are imposed. The following table shows the supporting elements and the values that you need to set.

The character value Y instructs the system to make the check. The minimum and maximum earnings limits require a second variable to hold the limit.

Exemption

Variable

Character Value

Amount Value

Minimum earnings

SUP VR MINEARN YN

Y

 

Minimum earnings

SUP VR MINERN AMT

 

Applicable Limit

Age 70 and over

SUP VR 70&OVER YN

Y

 

Age under 18, and work 30 or less hours per week

SUP VR UNDER18 YN

Y

 

Maximum earnings limits

SUP VR MAXEARN YN

Y

 

Maximum earnings limits

SUP VR MAXEARN AMT

 

Applicable Limit

Age-based limits

SUP VR AGEBSD

Y