How do I record Superannuation on Redundancy Payments?

Tax Ruling

According to the Australian Taxation Office’s Superannuation Guarantee Ruling SGR 2009/2, lump sum payments on termination such as payment of unused annual leave or long service leave pay do NOT attract the superannuation guarantee because it is not considered to be ordinary time earnings (OTE). The ruling also provides that redundancy pay is NOT considered to be part of an employee’s OTE and, therefore, does not attract the superannuation guarantee.

There may be certain circumstance where you wish to include superannuation in redundancy claims.

Option 1

Enter superannuation into the Superannuation claim field and pay the dividend normally.

Option 2

Use the software settings to include superannuation as part of the Retrenchment in lieu of notice amount.

Note

This creates a "circular calculation" amount where the super amount is part of the total of the RILN claim. When importing the claim include the super amount in the total. The software needs to do this to properly estimate the total of the claim for adjudication, rather than creating an additional liability once the claim is paid.

To include superannuation as part of RILN:

1. First check the Application settings from Manage Application Settings under the Main Menu. Click on the Tax Settings tab and tick "Automatically deduct Superannuation from Retrenchment in Lieu of Notice payments"
   
   
   When this option is ticked you will notice in the Employee Creditors Claim tab (Inc. Super) is noted next to Retrenchment ILN. The Amount entered should include super.
   
   
   
   
2. Pay the distribution.

Note

The superannuation portion is posted to Super Withheld (Priority Dividend) to be forwarded to the ATO as a separate payment.