The Government’s proposal to enable individuals with multiple employers to elect to “opt out” of the superannuation guarantee (SG) system in respect of their wages from certain employers is not yet law.
Under current legislation, highly paid individuals with more than one job can find they exceed their $25,000 concessional contributions cap each and every year. The reason being that the compulsory 9.5% SG contribution for anyone earning a total of more than $263,157 gives rise to a cap breach.
Those individuals with only one job are currently protected from this problem because SG contributions are only compulsory up to a salary base of $54,030 per quarter or $216,120 per annum. However as that upper limit applies to each and every employment arrangement, those with multiple jobs currently have no way of avoiding the problem.
As part of the May 2018 Federal Budget, the Government had proposed (sensibly) to allow affected individuals to opt out of compulsory SG contributions under these circumstances and negotiate to receive additional wages instead.
Whilst this proposal was due to commence on 1 July 2018, Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018 is still awaiting progress in the Senate. It would appear that the delay in the passage of this Bill is due to other measures in the Bill which the Australian Labor Party does not support, in particular the proposal to allow a once-off 12 month SG amnesty to correct historical SG non-compliance.
With Parliament not sitting again until 2 April and an election expected to be called shortly thereafter, it is not clear whether this proposal will be legislated in time for it to have application for the April to June 2019 quarter.
Having now waited almost 12 years for this problem to be fixed, let’s hope it becomes a reality sooner rather than later.