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Stephen Chiang

Jul 10, 2023

excess SG

in SMSF Technical Forum

In FY2022, an employer made $48,500 into the employee's nominated industry super fund. This is due to the employee's high commission earnings for the year. This has exceeded the cap and the employee will have to pay excess contribution tax.

The employer is not responsible for monitoring each employee's super contribution level. I note that the max SG for 2022 was 10% on earnings of $58,920 per quarterly.

In this situation, could the employee be entitled to get the portion of excess SG ($48,500 less $27,500) in the form of wages and be taxed accordingly?

I am looking from the angle that SG forms part of the employees remuneration package. I am aware that all SG must be made to a compliance fund to be tax deductible.

Your opinion please and many thanks

5 comments

Comments (5)

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THE AUDITORS INSTITUTE

Jul 11, 2023

Hi Stephen

Yes superannuation guarantee has to be paid on commissions as they are treated as being ordinary times earnings (OTE) for SG purposes.

My view is that SG has to be paid on the commissions and the only option would be for the employer to pay SG on the quarterly earnings limit and they could pay the additional amount not paid as SG as a bonus.

Thanks

THE AUDITORS INSTITUTE

Jul 12, 2023

Replying to

Hi Stephen

Yes the employer is obligated to continue to pay SG based on the OTE requirements each quarter based on the maximum quarterly earnings amount.

Thanks

THE AUDITORS INSTITUTE