Super guarantee loophole closing six months earlier than originally planned

THE Institute of Public Accountants (IPA) has commended the Federal Government for the Bill which will stamp out wage theft brought about by a loophole in the superannuation guarantee (SG) rules.

“The loophole came about where an employee salary sacrifices into his or her superannuation and the employer use that contribution to form part of the employer’s obligation to pay the 9.5 percent SG,” IPA chief executive officer, Andrew Conway said.

“The loophole will now be closed.  This integrity measure has been a long time coming.  In 2017, there was a Bill to fix this anomaly, but it lapsed before the election. 

“The IPA advocated for the measure to be brought forward from its proposed date of 1 July 2020, to the start of this financial year namely 1 July 2019.

“Employers have had enough warning of the government’s intention to stop this unscrupulous behaviour. We are pleased that the Senate agreed with our position and recommended the measure to be brought forward to 1 January 2020," Mr Conway said.

“When someone undertakes a salary sacrifice into superannuation, they are attempting to provide sufficient savings to live more comfortably when they retire. They are sacrificing spending money today to build their nest egg which is a good thing as it means less reliance on government support in retirement.

“Therefore, this measure is important to ensure individuals’ investments for their future are protected.

"t’s ironic that whilst we are discussing an SG increase to 12 percent, some employees may not have been receiving the current 9.5 percent whilst the loophole has been exploited,” Mr Conway said. 

www.publicaccountants.org.au

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