Key salary negotiations flagged with new SG opt-out
While the proposal to allow high-income earners to opt out of SG is a welcome move, employees need to ensure they will still receive their full entitlements after opting out of SG from employers, warns a technical expert.
In this year's budget the government announced a measure to allow individuals with incomes in excess of $263,157 to avoid SG payments coming out of wages from certain employers. The measure is set to apply from 1 July 2018.
Cooper Partners head of SMSF and succession Jemma Sanderson said the measure is aimed at helping eligible individuals to avoid unintentionally breaching the $25,000 annual concessional contributions cap as a result of multiple compulsory SG contributions.
For clients who want to opt out of SG from certain employers under this measure, it's very important to ensure they continue to receive their full entitlements from employers.
"If a client has a salary of $100,000 from one of their multiple employers plus superannuation, you don't want the employer to say now that we don't have to pay you super we're just going to pay your $100,000," she warned.
"At the moment, they do actually get that super component back as salary when they're in excess of their cap with SG, but it's a longer-term process to get it back."
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.