29 Jan The busy business owner’s guide to super
Harder than it seems, judging by the endless revelations about businesses failing to meet their obligations. Rohan Geddes is a PricewaterhouseCoopers partner and was named Global Payroll Consultant of the Year in 2017. Below, he provides some tips on how business owners can avoid the financial and reputational damage that can arise from super mishaps.
The story behind the shrieking headlines
“Industry Super Australia released a report in 2016 saying that in 2013-14 around a third of Australian workers were underpaid by an average of around $1500 a year when it came to super contributions,” Geddes notes.
If 2.4 million Australian workers failed to get the right super in 2013-14 (and presumably things haven’t improved much since then), it suggests the problem runs deeper than a handful of dodgy operators.
“Business owners who experience cashflow issues may opt to put off making super contributions until their financial situation improves,” Geddes says. “But I don’t imagine many employers set out to avoid meeting their obligations.”
Who do I owe super to? How much do I owe them?
It’s no excuse in the eyes of the law but businesspeople who aren’t meeting their obligations are much more likely to be confused than exploitative. In their defence, there’s plenty to be confused about.
First, there’s the basic question of whose super a business owner is responsible for. If someone is their (full-time, part-time or casual) employee, is over 18 (or works more than 30 hours a week if they are under 18), and earns gross wages of $450 and above in a calendar month, they get super.
Business owners generally don’t have to pay contractors super. But sometimes they do. “Just because a contractor has other clients and an ABN, doesn’t mean a business owner doesn’t have to pay them super,” Geddes says. “If they are a self-employed contractor and engaged under a contract that is wholly or principally for their labour, they are likely to be classified as an employee for super purposes.” As Geddes points out, “This is already a headache for business owners and only likely to become more so as the gig economy expands.”
Just to make things more complicated, super is not calculated on the total amount someone makes but rather their ‘ordinary time earnings’. This includes their salary and extra payments such as commissions, shift loadings and allowances but not overtime.