Super guarantee opt-out coming for high earners
High earning individuals will have an option to opt-out of receiving certain superannuation guarantee amounts from 1 July 2018. Under the proposed legislation, employees earning over $263,157 with multiple employers will be allowed to receive additional cash from the second employer.
This additional cash received in lieu of superannuation guarantee will prevent an inadvertent breach of the super contribution rules, which are taxed at penalty rates. The law will be enacted allowing the ATO to issue an employer with a shortfall exemption certificate. This can only occur when an employee would likely have excess concessional contributions.
This new law, when enacted, may free up additional cash flow for high income earning individuals, as well as reduce overall paperwork for superannuation compliance.
If call Martin van der Saag or our Superannuation Specialist Cayle Petritsch if you have any questions. Read more Superannuation articles.
“High-earning individuals with multiple employers may soon be able to opt out of receiving some compulsory super guarantee contributions.”
About the author
Cayle Petritsch - Director & Wealth Advisor
Cayle Petritsch, Director and Wealth Advisor, works with our existing clients who have recognised the importance of business owners making strategic financial choices not only for their company, but for their personal finances too.
Cayle saw a great opportunity to expand North Advisory’s services into SMSF/superannuation, personal wealth management, asset protection services and other crucial personal finance facets that business owners need to consider.
His approach to wealth management allows you to receive highly personalised wealth advice. Working closely with Marius, Cayle understands the unique needs of every client, from their lifestyle and business goals to their retirement plans.
Key Takeaways
Designed to Prevent Cap Breaches
The SG opt-out helps high-income earners avoid unintentionally exceeding the concessional super contributions cap due to multiple employer SG contributions.
Requires an ATO Exemption Certificate
You must apply for and be issued an employer shortfall exemption certificate from the ATO for each financial year you want the opt-out to apply.
At Least One Employer Must Still Pay SG
To qualify, at least one of your employers must continue making SG contributions for each quarter the exemption certificate covers.
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Frequently Asked Questions
What is the Super Guarantee (SG) opt-out for high earners?
It’s a measure that allows high-income earners with more than one employer to opt out of receiving some SG contributions to avoid exceeding the annual concessional contributions cap.
Who qualifies for the SG opt-out?
Employees with multiple employers whose combined SG contributions are likely to exceed the concessional cap in a financial year are eligible to apply for an exemption certificate from the ATO.
How do I opt out of SG contributions?
Eligible employees must apply to the ATO for an employer shortfall exemption certificate using the approved form at least 60 days before the start of the first quarter they want covered.
Does opting out mean I get no super at all?
No — you must still receive SG contributions from at least one employer in each quarter covered by the exemption.
Will my employer still pay SG if I opt out?
If you obtain the exemption certificate and provide it to your employer, they are not liable for SG contributions for the relevant periods — but they can choose to continue contributions if they wish.
What’s the main benefit of opting out of SG from my second employer?
It allows you to receive additional cash in lieu of SG, which helps prevent an accidental breach of the contribution rules (which can be taxed at penalty rates) and may improve cash flow and reduce compliance paperwork.
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