CONTENTS Are we seeing green shoots? The 2009 Federal Budget New OTE ruling Administration Update Investment returns Quarterly Superannuation Guarantee (SG) Contributions Would you like to see more of us? Office locations Are you sending your communications to the right place?

August 2009 Welcome In this edition of the Employer Newsletter, we discuss the 2009 Federal Budget announcements that may affect your employees, as well as a new OTE ruling from the Australian Tax Office (ATO) and changes to the late payment offset.

We also provide some administration updates and, as usual, we update you on the Energy Industries Superannuation Scheme’s investment performance and our forthcoming seminar schedule.

We value your feedback, so please feel free to send us your comments or any suggestions on what articles you'd like to see in future newsletters by emailing: employerservices@eisuper.com.au

Are we seeing green shoots?

Michael Block, GM Investments

Over the past three months share markets in Australia and overseas have recovered from their lows, the $A has steadily risen and the demand for risky assets has increased.

The most common phrase associated with this situation is “green shoots” suggesting that there is hope for an early recovery in 2009/2010 and that there are signs of regrowth. The term may even suggest that any downturn will not be as severe as first anticipated.

We are pleased with the rise in prices and the renewed optimism but urge caution about expecting the high growth of 2002 to 2007 to re-emerge.

Perhaps this is a case of investors not seeing the forest for the green shoots.

Our view is that the share market was unrealistically high in 2007 because company earnings were at peak levels and share prices anticipated further high growth.

It was no surprise that prices would return to more realistic levels at some point but it was a huge surprise just how savage and quick the falls in equity prices were, taking more than 50% off Australian stock prices.

We believe that just as prices were unrealistically high in 2007, they also became unrealistically low in 2009, well below long-term averages and driven by an anticipation that the economy would be even worse than initially expected.

With that in mind, it seems to me that the recent buoyancy is more likely to be the market correcting the panic of 2008/2009 and returning prices to a more normal level than a new bull market.

Let’s not lose sight of the big picture, the forest, if you will.

Once this cycle of correcting an overshoot on the downside is finished, further gains depend on real economic growth.

We believe that the path ahead is volatile and uncertain and that we would not expect the markets to reach their 2007 peaks anytime soon, especially if the economy grows at a more modest pace.

On that basis we would not expect share prices to continue rising at a fast pace.

It is too early to say what might happen in the longer term. The unusual market volatility of the last year or so may continue for some time to come and much will depend on developments in the world economy. While I welcome the market rally and the return of investor confidence I couldn’t say, to maintain the botanical analogy, that we are out of the woods just yet.

The 2009 Federal Budget

Federal Treasurer Wayne Swan announced some changes to super in the May Federal Budget that may affect your super savings. Here is a summary of the changes you need to know about:

The Co-Contribution Scheme

The Government will temporarily reduce the amount by which it will match the after-tax personal super contributions you make as part of its Co-Contribution Scheme. The maximum matching rate will fall from $1.50 to $1.00 (from 1 July 2009), but will revert back to $1.50 in the 2014/15 financial year.

Despite the reduction in the rate, the Co-Contribution Scheme still provides a return that’s hard to beat and is one of the best ways of boosting your retirement savings.

If you have an annual income of $31,920 or less, the Government will match your contribution with a payment of $1.00 for every $1.00 you put in up to a maximum of $1,000. The amount the Government pays steadily reduces on incomes over $31,920 and stops after the income level tops $61,920.

Concessional contribution cap to halve from 1 July 2009

The cap on concessional contributions will be reduced from $50,000 to $25,000 a year (indexed) from the 2009/10 financial year.

Concessional contributions are before-tax contributions to super. These are taxed at the concessional contribution tax rate of 15% and include the Superannuation Guarantee (SG) payments and your voluntary salary sacrifice contributions.

The transitional concessional contributions cap for those aged 50 and over - or who turn 50 before the end of the 2011/12 financial year - will also be reduced from $100,000 to $50,000 a year (not indexed).

The annual cap on non-concessional or after-tax contributions will remain at $150,000 in the 2009/10 financial year. After that, it will be six times the level of the (indexed) concessional contributions cap.

Lost super

From 1 July 2010, super funds like Energy Industries Superannuation Scheme will be obliged to transfer any lost super accounts to the Australian Tax Office (ATO). This will include lost accounts with balances of less than $200 and those which have been inactive for more than five years and for which there are not sufficient records to identify the owner.

If you believe you have any lost super, you can track it down at www.ato.gov.au/super or by calling 13 28 65. You will be able to reclaim lost super from the ATO at any time.

New OTE ruling

In May, the ATO issued a new ruling on the meaning of ordinary time earnings (OTE) - the only earnings base that can be used for calculating minimum employer Superannuation Guarantee (SG) contributions.

The new ruling (SGR 2009/2) replaces SGR 94/4 and 94/5. It differs significantly from a draft of the new ruling released in November 2008.

KEY POINTS

Excluded from OTE:

• Overtime
• Benefits under employee share schemes

Included in OTE:

• Christmas bonuses
• Payments in lieu of notice

“Ordinary hours of work” will be as specified in an industrial award or employment agreements. Exceptions apply and are detailed in the ruling.

The SG status of certain kinds of leave payments have been clarified by recent Superannuation Guarantee (Administration) Regulations effective 1 July 2009. Payments made to an employee in respect of a period of eligible parental leave, an eligible community service activity, or service with the Australian Air Force (for example the Reserves) are not considered to be ‘salary or wages’ under the Superannuation Guarantee (Administrators) Act.

CAUTION

Before making any changes, please refer to the SGR 2009/2 which can be found on the ATO’s website at www.ato.gov.au. The ruling is over 40 pages long and contains a number of examples which may need to be considered first.

Changes to the late payment offset

The late payment offset (LPO) lets employers offset late super contributions they pay to an employee’s complying super fund against the Super Guarantee Charge (SGC) for that employee for that period.

The cut-off date for super contributions is the 28th day of the month after end of the quarter. This is the last day by which an employer can pay a super contribution to an employee's super fund before they are liable for the SGC.

From 26 March 2009, changes to LPO legislation mean that only late contributions paid before the employer’s original SGC assessment is made will be eligible for the LPO.

Eligible employers will generally be able to offset amounts they paid late to a super fund against the SGC if they:

• Have paid the late contribution to the employee’s super fund.
• Have paid the contribution before the original SGC assessment is made.
• Elect to use the LPO within four years of the original SGC assessment.

To receive the late payment offset, eligible employers must make an election on the SGC statement - quarterly (NAT 9599). If they have already lodged this statement, they must complete a Superannuation Guarantee late payment offset form (NAT 14899) instead.

For more information about applying for the late payment offset you, please phone the Australian Tax Office on 13 10 20 between 8.00am and 6.00pm, Monday to Friday.

For copies of the following publications, visit the ATO website at www.ato.gov.au

• Superannuation Guarantee Charge statement - quarterly (NAT 9599)
• Superannuation Guarantee late payment offset form (NAT 14899).

Administration update

To ensure that contributions are processed as quickly and efficiently as possible, the administration team has the following reminders for you:

• Please ensure when you complete an employer form or provide an Application for Membership form to an employee, it is a current form. For legal reasons we are unable to accept old, out-of-date forms. Most current forms can be printed off the Energy Industries Superannuation Scheme website. To obtain a copy, please click here. If you have difficulty gaining access to a form please contact member Services by calling 1300 369 901.



• When you provide a contribution file for one of our schemes, please ensure you include the Member Number for each employee. If you do not have member numbers for all your employees, please contact the Employer Helpline on 1800 636 441. Our team will provide you with an updated report of your active members, including their member numbers, to enable you to update your payroll system.



• When providing new member information on the contribution spreadsheet, please include full names, not just initials, as well as Tax File Numbers. In addition, please make sure that spouse contributions are clearly indicated.



• When remitting a contribution payment, please ensure that the file you send equals the payment. Please do not send multiple payments with one file or one payment with multiple files. We would prefer that a separate Payment be made for each File. The likelihood of human error is much reduced when there is a single payment and a single file.

Investment returns

June 2009 quarter returns for Contributor Financed Benefit - Retirement Scheme

Strategy	Quarterly Returns
High Growth	10.2%
Trustee Selection*	8.1%
Diversified	6.6%
Balanced	4.9%
Capital Guarded	2.8%
Cash Plus	2.0%

All figures are shown to one decimal place. Returns may vary slightly between Divisions of the Scheme.
* Available to Retirement Scheme members only.

June 2009 quarter returns for the Accumulation Scheme

Strategy	Quarterly Returns
High Growth	9.1%
Diversified	6.8%
Balanced	5.3%
Capital Guarded	3.9%
Cash Plus	2.0%

All figures are shown to one decimal place. Returns may vary slightly between Divisions of the Scheme.

Quarterly Superannuation Guarantee (SG) Contributions

All employers under the SG scheme must contribute the minimum level of 9% of each eligible employee's earning base in super support for each financial year. The Superannuation Guarantee contribution is required to be contributed on at least a quarterly basis. From 1 July 2008, your employees' earning base is their ordinary times earnings (OTE).

The following describes the ATO deadlines for employer contributions and the penalties that may apply if employers do not meet them. Energy Industries employers who make monthly contributions in accordance with the Scheme rules will more than satisfy these minimum requirements and will therefore avoid any of the penalties listed.

The ATO imposes penalties if SG contributions are not made by the quarterly cut-off date by applying an SG Charge (SGC)* which is made up of three parts:

• SG shortfall amounts based on OTE
• Interest on that amount (currently 10% per annum)
• Administration fee of $20 per employee per quarter.

If the SGC and the SGC statement are not submitted by the due date for lodgement additional penalties may apply and these are:

• General Interest Charge (GIC) from the SGC due date will be incurred. GIC compounds daily until SGC and accrued GIC is paid in full. The ATO can reduce the penalty. GIC is tax deductible in the year it is incurred.



• An amendment in the SG legislation, from 24 June 2008, means that if an employer makes an SG contribution to a superannuation fund which is late, the employer can elect to have this contribution used to offset against the amount of SG charge they have to pay to the ATO for not meeting their superannuation obligations. Please refer to the ATO website for further information at www.ato.gov.au.



• Penalties may also apply for false or misleading statements, avoidance, failure to provide information or failure to keep SG records.

The following table obtained from the ATO lists the standard cut-off and lodgement dates.

Superannuation Guarantee quarter ended	Cut-off date for Superannuation Guarantee Contributions	Due date for lodgement of a SG statement and payment of the SG charge if contributions are not made on time
1 July - 30 Sept	28 October	28 November
1 Oct - 31 Dec	28 January	28 February
1 Jan - 31 March	28 April	28 May
1 April - 30 June	28 July	28 August

* The SGC is not tax deductible and cannot be reduced by the ATO.

Would you like to see more of us?

As part of our service to you we offer free pre-retirement seminars to your employees, either on your site or at a venue close to you. If you'd like to organise a free seminar for employees, please call 1800 636 441.

Free pre-retirement planning seminars

Pre-retirement seminars are targeted at people who are over 50 years of age and provide information on the following: