The Government will ensure penalties for employers who inadvertently late- or short-pay their superannuation guarantee reflect the nature of the breach.

    These changes will take effect from 1 July 2016 and were announced in the Government's response to the recently released Board of Taxation report on the taxation impediments to the success and growth of small business.

    The report, which noted that superannuation penalties can be harsh and can often come with disproportionate outcomes, suggested that the superannuation guarantee charge be calculated on the basis of ordinary time earnings (OTE) rather than salary and wages to align it with the way that superannuation contributions are calculated.

    While OTE is a more complex definition, the report said this would mean no change to employers' current calculations. In its response, the Government said it supported this recommendation as part of the package of reforms to be implemented to reduce small business superannuation compliance costs.

    However, the Government did not support the board’s recommendation to allow employers to assess superannuation obligations for employees against a quarterly threshold of $1,350 (currently, the threshold is $450 per month) to reduce compliance costs.

    Under the proposed changes, employers who did not wish to change current systems would still meet their superannuation obligations if they continue to test on a monthly basis.

    The Government's response was that the proposal could reduce superannuation for some low-income earners and would not reduce compliance costs for the majority of small business that pay super guarantee contributions monthly.

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