AIBS National News

The Australian Tax Office (ATO) has decided not to proceed with its earlier plans that would have required employers to pay the compulsory 9% superannuation on overtime earnings.

In Superannuation Guarantee ruling SGR 2009/2 the ATO said that the concept of salary and wages paid 'in the ordinary hours of work' does not extend to overtime. The ruling, revised from earlier drafts, has limited the scope for industry to be exposed to what would have been a new superannuation charge based on regularly worked overtime. This had not been the way that superannuation laws had worked in the past, or were intended. The ATO has done well to avoid creating this problem.

ACCI will consult further with the ATO and government on other issues, including making the Tax Office ruling consistent with this week's decision by government not to include employer payments under the proposed paid maternity leave scheme in the superannuation net.

The Chief Executive of the Australian Chamber of Commerce and Industry, Peter Anderson, welcomed the decision, commenting that “a back-door increase in superannuation charges has been avoided. Hundreds of millions of dollars in extra superannuation charges would have resulted if overtime payments were included."

However the ACCI said that “Some aspects of the ATO ruling will however concern employers, especially requiring superannuation to be paid on termination payments in lieu of notice.”