Partial Superannuation Guarantee opt out
for high income earners with multiple employers
The Government has now legislated that eligible high income employees can apply to ‘opt out’ of superannuation guarantee payments to avoid exceeding contributions caps. Applications can be made up to 18 November 2019 for quarters commencing 1 January 2020, and then for subsequent quarters.
There are clear limits on how much you can contribute into your super before Government imposed penalties apply. The concessional contributions cap is particularly tricky as your contributions are dependant on your income and thus not easily varied.
Under new legislation, however, there is an option to reduce concessional contributions by a partial opt out of superannuation guarantee (SG) payments for one or more quarters.
A partial SG opt out is an arrangement between you and your employer, and approved by the ATO – there is no need to notify AvSuper.
What is a partial SG opt out?
If granted an employer shortfall exemption certificate by the ATO, an employer can choose to not make SG contributions into the nominated employee’s super account for the specified quarter(s).
The employer and employee can then negotiate how that money is passed onto the employee, for example as a cash payment or a non-cash remuneration, in place of the SG contribution. Details of that arrangement are not required by the ATO.
In effect, the certificate protects the employer from not meeting their SG obligations (by reducing their maximum contributions base to $0 for the specified quarter(s)) rather than mandating them to provide the money in a different way.
The partial SG opt out may not wholly prevent you from exceeding the concessional contributions cap, depending on your employment circumstances.
Am I eligible?
Most employees will not be eligible to apply for a partial SG opt out as you must satisfy the following:
- you (not your employer) complete the relevant form within the correct timeframes
- have more than one employer with SG obligations to you in the relevant quarter(s)
- be currently working for that employer when you apply for the opt out (ie you cannot apply for a prospective or past job)
- be reasonably sure you will exceed the concessional contributions cap if the partial opt out is not allowed
- the ATO deems the certificate to be appropriate in your circumstances
Note that your employer is not required to participate, and in some instances may not be able to stop SG contributions.
How do I get a partial SG opt out?
As an employee, you can apply for a partial SG opt out by completing a Super guarantee opt out for high income earners with multiple employers form (NAT 75067) (available from the ATO website).
You must apply no later than 60 days before the start of the relevant quarter. You can include multiple employers and quarters (within the same financial year) in one application, but remember that at least one employer must pay SG for you in any given quarter.
If your application is accepted by the ATO, they will write to you and your employer(s) to confirm the certificate is in place. Once in place, a certificate cannot be varied or revoked although you and your employer may agree for contributions to resume if the risk of a cap breach is no longer in place.
Email: firstname.lastname@example.org | Local call: 1300 128 751 | www.avsuper.com.au