New superannuation changes are coming but the Federal Government is close to deciding whether to delay the scheme
By Brad Gardner
Superannuation changes with the potential to increase business costs are coming, but the Federal Government may delay the scheme until July 1.
Industry group NatRoad is pushing for Minister for Superannuation Nick Sherry to delay the introduction of the 9 percent superannuation obligation on “regular, normal, customary or usual” overtime work.
The Australian Taxation Office (ATO) wants to introduce the scheme for trucking operators on April 1, while all other industries will be given a three-month reprieve.
Sherry has the power to ask the ATO to introduce the scheme for all industries from July 1 and is due to decide soon on whether to do so.
Unless the scheme is delayed, trucking operators will have less than a week to overhaul current practices.
Consultancy firm Meyrick and Associates has warned the changes will increase employment costs “due to the common incidence of overtime work for yard staff”.
“In dollar terms, a large operator with hundreds of employees could incur a $780,000 increase in its total employment cost, though this amount will vary a great deal between firms,” Meyrick says.
The changes to superannuation have been described as “mind-numbingly stupid” by South Australian Road Transport Association (SARTA) Chief Executive Steve Shearer.
He says it does not make sense to increase obligations at a time when superannuation funds are being buffeted by the worldwide recession.
“Why would you force that money down the drain,” he asks.
Operators liable under the new scheme will also be hit with higher payroll taxes and insurance premiums, which the Australian Road Transport Industrial Organisation (ARTIO) estimates will increase by as much as 6 percent.
It says the ATO’s ruling may add an extra five percent to an operator’s annual transport bill.
NatRoad Chief Executive Bernie Belacic says the changes will lead to confusion because a company’s obligations will vary depending on the hours employees work.
“No-one will have any idea what their obligations will be,” Belacic says.
He says the current method of paying 30 percent on top of the base rate offers companies consistency because the payment is always the same unless the driver advances a grade.
NatRoad says the ATO wants to impose the scheme on the industry from April 1 because it objects to the current method of paying 30 percent on top of the base rate.
The tax office argues this does not constitute payment for overtime work because drivers receive the 30 percent extra regardless of whether they work extra hours.
The ARTIO criticised the ATO’s decision to link superannuation to overtime work, saying determining what constitutes ‘regular’ is subjective and hard for a company to abide by.
“Determining when a driver’s additional hours become sufficiently ‘regular, normal, customary or usual’ could only be made in hindsight and only after the due date for contributions had passed,” the organisation says.
ATN has contacted Minister Nick Sherry’s office for comment