The Institute of Public Accountants (IPA) has alerted all superannuation stakeholders the irregularity in the retirement savings system regarding the super guarantee (SG) levy and salary sacrifice arrangements has now been addressed.
The glitch in the nation’s superannuation framework to which the IPA is referring is one that allowed employers to include any salary sacrifice arrangements set up for employees as part of the their 9.5 per cent SG obligation.
“The loophole came about where an employee salary sacrificed into his or her superannuation and the employer used that contribution to form part of the employer’s obligation to pay the 9.5 per cent SG,” IPA chief executive Andrew Conway said.
The flaw in the system has now been amended, taking effect from the start of 2020.
“Those employers who were doing the wrong thing by their employees can no longer get away with it. As of 1 January 2020, employers cannot use employee salary sacrificed contributions to fulfil employer SG commitments,” Conway said.
The legislative change was originally planned to take effect on 1 July 2020, but was moved forward to 1 January. The IPA welcomed the advancement of the new measure despite having previously called for it to be implemented from 1 July 2019.
“The IPA had originally advocated for the measure to be brought forward from its proposed start date of 1 July 2020 to the start of this financial year, namely 1 July 2019,” Conway said.
“We were pleased that the Senate at least partly agreed with our position and recommended the measure be brought forward to 1 January 2020.”
In light of having the loophole closed, the accounting body has recommended employees revisit their salary sacrifice arrangements to ensure the new regulations are being adhered to.
In July 2017, then-revenue and financial services minster Kelly O’Dwyer announced this anomaly in the system would be shut down as a result of one of the recommendations contained in the Superannuation Guarantee Cross-Agency Working Group’s report, “Superannuation Guarantee Non-compliance”.