House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Treasurer, the Hon John Dawkins, M.P.)

Chapter 8 - Redistribution of the Charge

Overview of the Chapter

This chapter discusses the redistribution of the charge paid to the Commissioner.

Explanation

Amount of charge which can be redistributed

The Commissioner will be required to deal with the shortfall component of a payment of superannuation guarantee charge. [Clause 58]

The shortfall component of a payment of superannuation guarantee charge for a particular employee is determined as follows:

•

if the payment of the charge is only for one employee, the shortfall component is equal to the amount of the payment less the administration component and any penalties (other than late payment penalty that relates to the individual superannuation guarantee shortfall);

•

if the payment of the charge is for more than one employee, the shortfall component for all employees is equal to the amount of the payment less the administration component and any penalties (other than late payment penalty that relates to the individual superannuation guarantee shortfall). The shortfall component for a particular employee is calculated as follows:

shortfall component for all employees * (individual superannuation guarantee employees shortfall for the employee / total of the employer's individual superannuation guarantee shortfalls for all employees)


Example

If the example at the end of chapter 4 is used, the employer's shortfall component for all employees is $618 (i.e. $728-$110). The individual employees shortfall components are calculated as follows:

Employee A $618 x ($276 / $534) = $319
Employee B $618 x ($258/ $534) = $299


Method of redistribution of the shortfall component

Once the shortfall component is determined, the Commissioner is required to deal with that component by either:

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paying the amount of the component to a superannuation fund nominated by the employee. in accordance with the regulations, for the benefit of the employee; or

•

making arrangements in accordance with the regulations so that the amount of the component may be paid to a complying superannuation fund for the benefit of the employee. [Clause 60l

There are two exceptions to the above rules. If an employee is under 55 years of age and retires from the workforce due to illness the Commissioner must pay the shortfall component to the employee. Also, if the employee has died, the shortfall component must be paid to the legal personal representative of the employee. [Clauses 61 and 62]

Appropriation of redistribution monies

Amounts of shortfall components which the Commissioner is required to pay, are appropriations out of the Consolidated Revenue Fund. [Clause 65]

Recovery of overpayments

If an amount of any shortfall component is overpaid, whoever receives the money is liable to repay to the Commonwealth the amount overpaid. This will usually be the superannuation fund except in the limited circumstances where the money is paid direct to the employee or a deceased employee's representative. The amount overpaid will be a debt due to the Commonwealth. [Clause 63 and 64]