In Australia, superannuation is basically a legislated form of forced savings and means that people have more money available for them upon retirement and don't need to rely on government pension.
For a lot of tradesmen, it can be easy to assume that superannuation just takes care of itself and there's not much you need to consider. It's important that both employees and employers understand their obligations when it comes to superannuation. After all, Tax Office estimates that there are over 600,000 employers who need to make superannuation contributions for their employees.
Superannuation for Employers
For employers, the first step to superannuation is have an understanding of who they need to make payments for and what their obligations are for the people working under them. As well as making superannuation payments for employees, employers must also make payments for contractors if they meet certain criteria and for any permanent residents. This is particularly important for tradesmen to consider as often if they hire contractors, they assume they don't need to make payments for their superannuation.
Remember, there can be significant penalties if you don't meet your minimum obligations as an employer for superannuation contributions. Keep clear records of superannuation contributions that have been made so you can provide evidence down the track that you've made the correct payments.
Superannuation can be complex for employers, particularly if you have a number of employees, so it's a good idea to speak with your accountant or the Australian Tax Office to make sure you're meeting all your obligations. As an employer, it's important that you have a good knowledge of superannuation and provide information to your employees by way of training or access to a financial advisor or accountant.
Superannuation for Employees
For employees, superannuation is a great way to make sure you'll have enough money in retirement. If you're working, your employer will put approximately 10% of your pay into your superannuation fund on your behalf. The amount that your employer puts into your fund will gradually increase and will rise to 12% by 2019. The money in your fund is invested to ensure it grows over time. You can also opt to have additional payments made into your superannuation fund.
If you're an employee, superannuation is generally fairly straight forward as your employer is obligated to make contributions on your behalf. Remember to speak to your employer to confirm that the correct payments are being made. If you're a subcontractor or self-employed, you are generally required to pay your own superannuation contributions. However, it's important to remember that even if you're a contractor, your employer may be required to make payments on your behalf if you actually meet the criteria for an employee. Visit the Australian Tax Office website for more information.
As well as providing useful information specific to tradesmen, All Trades Cover offers insurance packages to suit your business needs. For more information or to obtain a quote, contact All Trades Cover today on 1300 826 850 or fill in our easy online form.