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Act regarding superannuation defines how superannuation guarantee charges affect various insolvency administrations. From 31 December 2007, employees of companies that go into liquidation, voluntary administration or receivership will have a better chance of receiving their super entitlements due to changes to the Corporations Act 2001. Various insolvency situations are briefly discussed:

Liquidation starting before 31 December 2007
If a company goes into liquidation before 31 December 2007, any super guarantee charge payable is afforded priority, equal to that of a debt of the company, by section 52 of the Superannuation Guarantee (Administration) Act 1992(SGAA).

However, section 556(1A) of the Corporations Act 2001 caps the amount that can be paid to an excluded employee under paragraph 556(1)(e) at $2,000. Furthermore, individual employee’s shortfall amounts should not be included in any calculation of the $2,000 limit prescribed in subsection 556(1A) of the Corporations Act 2001.
Liquidation commencing on or after 31 December 2007
The Corporations Act 2001 has been amended to include the superannuation guarantee charge together with superannuation contributions in Section 556(1)(e), with effect from 31 December 2007. Moreover, claims of excluded employees and their spouses exceeding $2,000 will rank with unsecured creditors.

In the case of a receivership through the operation of section 433(3)(c) of the Corporations Act, the superannuation guarantee charge will be dealt with in the same way as other wage-related priority debts under section 556(1)(e) of the Corporations Act.

Under section 109 (1C) of the Bankruptcy Act 1966, the superannuation guarantee charge has been afforded priority in bankruptcy since 5 May 2003. The priority under section 109(1C) covers the general interest charge for the non-payment of the superannuation guarantee charge. However, the maximum amount subject to the priority is adjusted annually. For example, it was:

  •  $3,850 for the year starting 1 July 2008; 
  • $3,750 for the year starting 1 July 2007.

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