Salary sacrificed super contributions can no longer be used to reduce an employer’s super guarantee obligations.
From 1 January 2020, salary sacrificed superannuation contributions cannot be used to reduce an employer’s super guarantee (SG) obligations, regardless of the amount an employee elects to salary sacrifice.
The effect of the amendments to the Act prevent employers from using their employee’s salary sacrifice superannuation contributions to reduce employer SG contributions and to ensure that employer SG obligations are paid on the pre-salary sacrifice amount.
Employers are now required to calculate SG amounts based on the employee’s ordinary time earnings (OTE) ‘base’. The base is the sum of:
- the employee's OTE
- the amount salary sacrificed from the employee's OTE.
What should employers do next?
1. Review your salary sacrifice arrangements to make sure you:
- have a current superannuation salary sacrificing agreement in place with the relevant employees;
- are using your employee's OTE base to calculate your SG obligation;
- are not counting salary sacrificed superannuation amounts towards the minimum amount of SG you have to pay.
2. Check that your payroll/accounting systems correctly calculate your SG obligations.
If you need assistance understanding these changes, please do not hesitate to contact our team. Subscribers to Your HRdocs can download a Superannuation Salary Sacrifice Template Agreement from Your HRdocs.