A private member's bill put before the House of
Representatives seeks to abolish the current age limits governing
the payment of superannuation by employers in Australia.
Under the current provisions of the Superannuation Guarantee
(Administration) Act 1992 (Cth) employers are not required to
pay superannuation guarantee contributions on behalf of employees
once an employee reaches 70 years of age.
The Abolition of Age Limit on Payment of the Superannuation
Guarantee Charge Bill 2011(Bill), introduced
in the House of Representatives on 28 February 2011, seeks to
abolish the age limit under the Act on the premise that it:
would be equitable and eliminate age discrimination;
encourages older workers to remain in the workforce at a time
when the ageing of the population is increasingly creating
pressures on labour supply and the federal Budget;
assists the retention of older workers in the workforce, which
boosts the economy when compared with a retirement situation;
promotes the utilisation of skills that older workers
Although it has yet to be referred to a House of
Representatives or Senate committee for consideration or report, on
its face the Bill appears to capture a significantly larger
population of workers than the superannuation reform proposals of
the current government.
Position of government
As recently as 2 May 2010, the government announced its own
plans for reform of the superannuation guarantee age limit, by
increasing it from 70 years to 75 years. The government has
estimated its reform will benefit around 33,000 employees.
Impact on employers
Whilst the Bill has received support from certain industry
groups, including the Financial Planning Association of Australia
Limited, there are concerns that it could cause financial pressures
The most significant issue for employers arising from the
proposed Bill is the additional cost incurred in employing older
workers. By seeking to wholly abolish age limitations, the Bill has
the effect of requiring employers to make superannuation guarantee
contributions to a larger population of employees than seen under
either the current system or the reform package proposed by the
government. Accordingly, it has the potential to expose employers
to greater levels of cost and liability in terms of superannuation
The Bill's interaction with the Income Tax
Assessment Act 1997 (Cth) may also be problematic for
employers, given they are currently unable to claim deductions for
contributions after the period of 28 days beyond the end of the
month from which an employee turned 75.
Cooper Grace Ward was named Best Australian Law Firm in the BRW
Client Choice Awards 2010 - Revenue < $50m. Joint Best
Australian Law Firm in the BRW Client Choice Awards 2009 - Revenue
The firm has also been named as the fastest growing law firm in
Australia for 2009 by The Australian.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Depending on the type of ETP, the employee's age and years of service, the amount may be taxed in various different ways.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).