Super Guarantee and Multiple Employers for highly paid employees

With many Australians having more than one employer It’s not uncommon for people to have Super Guarantee from Multiple Employers paid to separate funds. We often find employers simply default their employees to a single fund leading to multiple Superannuation Guarantee accounts with various Superannuation providers.  Those individuals fortunate enough to have a high paying job can sometimes run into difficulty where Super Guarantee Contributions are concerned.

Currently, the concessional contribution cap for the 2018/19 Financial year is set at $25,000.  For highly paid individuals, working with more than one employer can mean that person can easily exceed their concessional contribution cap.  This would result in a tax infringement leaving the individual liable for paying tax personally on the excess concessional contribution.

To mediate this issue, the Australian Government announced in the 2018 Federal Budget the following;

  • those individuals earning incomes above $263,157, who have multiple employers will have the opportunity to decide whether certain employers would need to provide Super Guarantee contributions in respect to their wages.This change took effect as of 1 July 2018.

This new measure provides immediate and potentially significant tax relief to those individuals who find themselves paying the excess tax on contributions in excess of $25,000.

Members who find themselves in this position should consider negotiating with their employer. You are now able to negotiate a higher income to effectively replace what would have been paid as Superannuation Guarantee. Thereby reducing the potential for breaching the Maximum Deductible Contribution limit of $25,000

As this change has already taken effect as of 1 July 2018 it is important to start having these negotiations now. 

While this change is positive and a long overdue measure, those individuals with one employer, who find themselves in the same position unfortunately have not obtained this flexibility.

If you are someone who has multiple employers, are earning an income above $263,157 and can now negotiate your wage, you should consider booking a review meeting with your financial planner to discuss what to do with the additional income. The additional income, if received from your employer, can perhaps change your investment profile and may even change your volatility to risk.

LifeTime Financial Group are specialist (holding appropriate accreditations) advisors who are ideally positioned to assist you in selecting and then managing your retirement funds.

Would you like to discuss your personal position further with one of our highly qualified financial planners? Why not call us today on 03 9596 7733?

There is no cost or obligation for our initial conversation/meeting.

Written by Anthony Stedman of LifeTime Financial Group. A leading privately-owned Melbourne Financial Planning practice.

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