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Directors liable for super guarantee charge
Company directors will be personally liable for the superannuation guarantee charge from 1 July 2011 under new measures in the Federal Budget, which could have unintended consequences for employers.
According to Hall & Wilcox Lawyers, directors will now be liable for more than the mandatory 9 per cent super guarantee, but will also be liable for the super guarantee charge, a tax on shortfall amounts of super.
The Government has said this expansion of a director’s duties is intended to improve tax compliance and counter fraudulent phoenix activities, but Hall & Wilcox Lawyers said it could have far reaching and potentially harsh consequences.
If the ATO determines contractors are employees for superannuation purposes, directors will be personally liable for the super charge despite the genuine belief that the higher fee paid to the contractor would compensate them for not receiving super contributions.
Hall & Wilcox have urged all employers to review their super arrangements for employees and contractors and consider whether changes need to be made before 1 July 2011.
AUTHOR
Ashleigh McIntyre
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