Claiming superannuation payments as a business tax deduction in 2022
Making superannuation payments on behalf of your employees prior to June 30 is an important tax planning strategy.
When to pay your employees' Q4 super guarantee (SG)
Your employee's super contribution is considered 'paid' on the date it's received by the super fund, not the date it's received by the clearing house. If you want to claim the Q4 SG payment as a business expense, it needs to have been received by the fund by 30 June, 2022. We recommend making payment by mid-June, at the latest.
If your payment is late for even by a day, you will not be able to claim the expense as a tax deduction. This means that your tax bill may be higher at the end of the financial year.
What type of employee super contributions can I claim at tax time?
Under the current super legislation, you can claim a tax deduction for the following super contributions you make on behalf of your eligible employees:
Super Guarantee (SG) contributions paid by the quarterly due date to an employee’s nominated super fund.
Mandatory contributions under an industrial award or determination, or a notional agreement preserving a state award.
Non-mandatory employer contributions (if paid within 28 days of the end of the month in which your employee turns 75 years old).
Contributions made under an effective salary sacrifice arrangement
SG Charge (SGC) pre-payments made for a future super contribution obligation in a later quarter.
Remember, late SG payments will incur a penalty via the Superannuation Guarantee Charge (SCG) which includes the unpaid contributions, interest and an administration fee. If you fail to lodge a SGC statement to the ATO for late payment, you may receive further penalties including an additional general interest charge and director penalty notices. Furthermore, the payment is no longer tax deductible.
What about your personal or top-up superannuation contributions?
Reminder that if you're planning to make a top-up superannuation contribution, you also need this payment to be cleared by your fund by 30th June, in order for the contribution to be used as a tax deduction.
The annual cap for concessional contributions is $27,500 for the 2021-2022 tax year. If you did not use up your concessional contribution cap in 2018/19 or 2020/21 and meet certain conditions, you may be eligible to carry forward the unused cap amount. This could enable you to make concessional contributions exceeding the annual cap in the 2022 or future financial years.
Changes to superannuation
The super guarantee (SG) rate will increase from 10% to 10.5% on 1 July 2022. Remember that you'll need to use the new rate to calculate super on payments you make to employees on or after 1 July, even if some or all of the pay period is for work done before 1 July.
From 1 July 2022, the $450 per month eligibility threshold for when SG is paid is being removed, meaning employees can be eligible for super guarantee (SG), regardless of how much they earn.
If you have questions about any of the information listed above, feel free to reach out to me, or Melissa McKenzie, to clarify how all of this applies to you.