Employee super better protected

EMPLOYEES of companies that go bust stand a better chance of holding on to their super entitlements following changes to the law.

Hands twisting money /File

Employee super better protected

EMPLOYEES of companies that go bust stand a better chance of holding on to their superannuation entitlements since changes to the Corporations Act, according to Deputy Tax Commissioner Raelene Vivian.

Ms Vivian said that under the changes, superannuation would be given the same priority as other debts and would rank equally with employee entitlements such as unpaid wages and annual leave.

This meant any outstanding superannuation contributions and superannuation guarantee charges would be paid to employees before payments to ordinary unsecured creditors, but after priority creditors and liquidators fees.

Excluded employees, such as company directors and their relatives, also would be entitled to claim the super-guarantee charge debt, but this would be capped at $2000, she said.

Most workers receive 9 per cent of their annual remuneration in the form of a payment into a super fund by an employer, although this can be as high as 17per cent in some professions.

Under the superannuation guarantee law, employers must pay compulsory superannuation contributions into a complying superannuation fund or retirement savings account on behalf of eligible employees.

Employers who do not make sufficient superannuation contributions every three months, or fail to pay into the employee's chosen fund, are liable for the superannuation guarantee charge, payable to the Australian Tax Office.

The ATO transfers the superannuation contribution and interest to the employee's chosen superannuation fund.

The new rules apply to companies going into liquidation, administration or receivership after December 31, 2007.