It has recently been reported that celebrity fashion designer, Johanna Johnson who has designed gowns for Madonna and Christina Hendricks is being pursued in court by the Australian Taxation Office (ATO) and former employees for more than $1 million. The amount includes at least $300,000 in owed superannuation that had not been paid to employees for many years.
The situation of Johanna Johnson’s business serves as a reminder to employers that they have superannuation obligations to various kinds of workers. The general rule is that if you pay an employee $450 or more before tax in a calendar month, an employer is required to pay superannuation in addition to the employee’s wages. The minimum an employer must pay is called the Super Guarantee (SG).
The SG is currently 9.5% of an employee’s ordinary time earnings. Employers must pay the SG at least four times per year, by the quarterly due dates.
If an employer fails to pay the SG into the correct fund by the due date, the employer may have to pay the SG charge. The SG charge is made up of the SG shortfalls amounts, interest on the amounts owing and the administration fee.
However, employees may not be the only workers entitled to superannuation. In On Call Interpreters and Translators Agency Pty Ltd v CoT (No 3) [2011] FCA 366 the Federal Court determined that contractors may be entitled to superannuation – in particular, in circumstances where a contract is considered to be wholly or principally for the labour of the person engaged and the following characteristics are met:
Therefore, employers must seriously consider reviewing all arrangements with employees and contractors to ensure they are paying superannuation to those who are entitled to, otherwise there is not only the risk of paying back the workers with interest their owed superannuation entitlements, but the possibility that the ATO can take the business to court for breach of superannuation guarantee legislation.
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