Superannuation Alert – Rule change for employers with salary sacrifice arrangements…
On 1 January 2020 new superannuation rules were introduced in relation to how the 9.5% superannuation guarantee applies when an employee enters into a salary sacrifice arrangement.
What are the new rules?
- Entering into a salary sacrifice arrangement will not reduce your employee’s ordinary time earnings base, and therefore it will not reduce the amount of super guarantee that you’re required to pay.
- In addition, where the salary sacrifice has been paid into a superannuation fund, you cannot include that contribution towards the minimum amount of super guarantee you have to pay.
Old V New – what does it look like?
The example below shows an employee with a remuneration package of $60,000 per year who chooses to salary sacrifice $10,000 into superannuation.
| Pre 1 January 2020 | Post 1 January 2020 | |
| Salary | $60,000 | $60,000 |
| Salary Sacrifice | $10,000 | $10,000 |
| Taxable Salary Amount | $50,000 | $50,000 |
| Salary for Super Purposes | $50,000 | $60,000 |
| 9.5% Superannuation Guarantee | $4,750(This could also have also been reduced to Nil as the $10,000 Salary Sacrifice amount was considered an employer contribution in excess of the 9.5% superannuation guarantee) | $5,700 |
Things to consider
Make sure that you are making your superannuation payments and lodgements on time each quarter, preferably before the due date to allow for any delays. This will ensure that you are not subjected to the new harsher penalties imposed by the ATO.
The ATO now has increased visibility with the changes to the STP reporting laws and can see more clearly what superannuation obligations businesses have. They are sending a strong message to employers to ensure that they meet the deadlines for payment even if the date falls on a weekend or public holiday. If your payment is late, even one day, you are still required to lodge a Superannuation Guarantee Charge (SGC) form, otherwise interest will continue to be charged.
The director of a company who fails to meet a SGC liability in full by the due date automatically becomes personally liable for a penalty equal to the unpaid amount.
Recommendations
We recommend the following to ensure compliance:
- Ensure that SGC payments are lodged and paid several days before the due date;
- Review your payroll software setup to ensure that the superannuation guarantee amount is calculating correctly for your employees that have a salary sacrifice arrangement in place.
If you are unsure whether you are correctly applying the new rules, then please contact Deanne Small from our office on 07 5439 0188 to discuss further or come in for a review consultation.