Guide for employees and self-employed - reportable superannuation contributions
Guide for employees and self-employed - reportable superannuation contributions
How reportable superannuation contributions work
Your reportable super contributions are the sum of the following:
- any personal deductible contributions you may have made
- any reportable employer super contributions your employer may make for you.
Your reportable super contributions affect the income tests for some tax offsets, deductions, concessions, the Medicare levy surcharge, and certain government benefits and obligations.
Personal deductible contributions
Your personal deductible contributions include any personal contributions you made to a super fund that you can claim a tax deduction for on your individual tax return.
You can claim an income tax deduction for personal contributions you make to a super fund if you meet certain eligibility criteria.
If you made a personal contribution and you did not claim a deduction for it, that amount is not a reportable super contribution.
Example 1
In the 2011-12 income year, Fred is self-employed and earns $40,000. Fred is not an employee for the purposes of super guarantee law.
Fred contributes $1,000 to his super fund. If he lodges a notice of intent to deduct and his super fund acknowledges that notice:
- he can claim a personal tax deduction of $1,000
- his taxable income is $39,000 if he claims no other deductions.
For income tests that include reportable super contributions, Fred's income is $40,000 - that is, $39,000 in taxable income, plus the $1,000 reportable super contribution amount.
Reportable employer super contributions
Reportable employer super contributions are those contributions your employer makes for you where all of the following apply:
- you influenced the amount or rate of super your employer contributes
- the contributions are additional to the compulsory contributions your employer must make under any of the following
- super guarantee law
- an industrial agreement
- the trust deed or governing rules of a super fund
- a federal, state or territory law.
What are reportable employer super contributions?
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What are not reportable employer super contributions?
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Contributions made under a salary sacrifice agreement.
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All super guarantee contributions.
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Additional amounts paid to your super fund (for example, you directed an annual bonus be paid to super).
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Compulsory super contributions required by the governing rules of a super fund or required by an Australian Government, state or territory law.
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You negotiated an increased super contribution as a part of your salary package (for example, under individual employment contracts).
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Employer super contributions made under a collectively negotiated industrial agreement.
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Remember:
- extra super contributions your employer makes for you under a salary sacrifice arrangement are reportable employer super contributions
- contributions you make from your after-tax income are not reportable employer super contributions.
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If your employer makes reportable employer super contributions for your benefit, they must include the total amount of these contributions on your payment summary. You must then include this amount on your tax return and we use it to calculate your total reportable super contributions for the income year.
Contributions additional to the compulsory contributions
Super contributions your employer makes for you are reportable employer super contributions if both of the following apply:
- they are additional to the compulsory contributions your employer must make
- you have influenced the amount of super your employer contributes for you.
Additional contributions are generally:
- salary sacrifice contributions
- amounts above the compulsory contributions your employer makes under an individual employment contract
- extra pre-tax contributions your employer makes for you.
To calculate your total reportable employer super contributions, your employer will reduce the total employer contributions they make for you by any compulsory contributions they had to make.
If you enter into an arrangement with your employer for them to contribute more super than they are required to, then you will be considered to have the 'capacity to influence' the amount of contributions made. Your capacity to influence will be shown by:
- your relationship with the employer
- your involvement in the negotiations concerning the terms of any industrial agreement governing the super contributions
- the size of the amount the employer contributes for you relative to the compulsory contributions the employer is required to make
- the super contribution arrangements the employer has in place for other employees
- any non-arm's length dealings.
Generally, you will not be taken to have the capacity to influence the amount of super contributions your employer makes on your behalf where the employees simply vote for a collective agreement, or are part of a group that negotiates a collective agreement with the employer.
You will be taken to have influenced the amount of contributions your employer makes on your behalf where you can directly negotiate, or have an option to directly negotiate, an employer super contribution in excess of the compulsory contributions.
Example 2: Employee influence
During the 2011-12 income year, Tula is an employee of MGK Pty Ltd. Tula's employment conditions are governed by an industrial agreement that was negotiated between Tula and the other employees of MGK Pty Ltd. The other employees are Tula's husband, Tony, and their adult children, Michael and Rena. There was no external involvement in the negotiations of the agreement and it was not made at arm's length. The agreement requires MGK Pty Ltd to contribute an amount equal to 15% of their employees' salary to super.
As the employer contributions made on behalf of Tula and her fellow employees are required under the terms of an agreement that was not negotiated at arm's length, Tula had capacity to influence the contributions. MGK Pty Ltd must report the difference between the minimum amount required to be made to meet their obligations under the super guarantee law and the amount paid under the industrial agreement.
This is because the contributions made on behalf of Tula and her fellow employees are both:
- required under the terms of an agreement that was not negotiated at arm's length
- contributions that Tula had capacity to influence.
Under the super guarantee law, the charge percentage for 2011-12 is 9% of the ordinary time earnings of an employee. If Tula's ordinary time earnings are $60,000, then the amount of reportable employer super contributions is 6% of $60,000, or $3,600 (the 6% applied is the difference between 9% and the contributed 15%).
Example 3: Employee influence
Under Jill's industrial agreement, she is required to contribute 6% of her ordinary time earning to an industry super fund. Because Jill can make the contribution from either her pre-tax or post-tax income, she has decided to make the contribution from her pre-tax income.
While Jill's contribution is in accordance with her industrial agreement, she has the capacity to influence the way that the amount is contributed so that her assessable income will be reduced. This amount will be a reportable employer super contribution.
Example 4: Employee did not influence
During the 2011-12 income year, Trevor is an employee of TKY Pty Ltd. Trevor's employment conditions are governed by an industrial agreement that is collectively negotiated between employees and TKY.
The existing agreement will soon expire and Trevor has been nominated as a bargaining representative on behalf of TKY employees. Trevor consulted with employees and, among other improvements, employees wanted an increase in super contributions to match their colleagues in other companies. The majority of employees wanted an additional 2%, which would increase the employer super contributions from the minimum 9% to 11%.
Negotiations commenced and Trevor presented the changes sought by the employees. Trevor was successful in obtaining an increase in employer super contributions to 11%. All negotiations were at arm's length and, although Trevor was involved and will benefit from the increased employer super contribution, the additional 2% will not be reportable employer super contributions for Trevor because he did not directly influence the contribution amount. The contribution amount was collectively negotiated between the employer and the employees. The additional 2% super contribution will not be reportable employer super contributions for any employees of TKY Pty Ltd as it is part of the compulsory 11% employer super contribution under the terms of the industrial agreement.
Salary sacrificed super
A salary sacrifice arrangement is a contractual agreement where you agree with your employer to forego part of your future salary or wages in return for providing benefits of a similar value. You cannot enter into a salary sacrifice arrangement for salary or wages you have already earned.
Under a salary sacrifice arrangement, you negotiate with your employer for them to make extra super contributions for your benefit from your pre-tax income. These extra contributions are reportable employer super contributions.
Example 5
Under Jill's industrial agreement, her employer must contribute 10% of her ordinary time earnings to an industry super fund.
Part way through the year, Jill enters into a salary sacrifice agreement with her employer to contribute an extra $10,000 of her pre-tax salary to the same super fund.
Only that additional $10,000 portion of the employer contributions are reportable employer super contributions that Jill's employer must report on her payment summary. This is because both of the following apply:
- the contributions are additional to the compulsory contributions Jill's employer has to make
- Jill directly influenced the amount of extra super her employer pays for her benefit.
Matching employee super contributions under an Australian law
Reportable employer super contributions do not include contributions an employer makes on behalf of their employees that are required by an industrial agreement or the rules of a super fund. If the employer is required to make additional contributions as a result of an industrial agreement or rules of a super fund, and neither the employer nor the employee can control the amount of the contribution other than by choosing what is detailed in the law, it will not be a reportable employer super contribution.
Example 6
During the 2011-12 income year, Rodger's employer is required under an industrial agreement to make an additional employer contribution for Rodger's benefit. The agreement allows Rodger to elect to contribute 0%, 5% or 8% of his salary as a personal after-tax contribution. Rodger's employer is required to contribute 9%, 11.5% or 13% respectively, based on Rodger's election under the industrial agreement. Rodger elects to contribute 8% as a personal after-tax contribution and his employer contributes 13% super as the employer contribution.
None of the amounts the employer contributes will be reportable employer super contributions, as the additional employer contributions are compelled by the industrial agreement. Additionally, none of Rodger's personal after-tax super contributions will be reportable employer super contributions, as the amounts are already included in Rodger's assessable income.
If you are on an individual employment contract, you can generally influence the amount of super your employer pays for your benefit. The contributions your employer makes from pre-tax income over any compulsory contributions they must make are reportable employer super contributions.
Example 7
Yoruba is an employee of Car Co Pty Ltd (Car Co). While negotiating his common law employment contract, Car Co offered to increase Yoruba's super contributions by $10,000 above their compulsory contributions as part of his employment benefits.
Yoruba was allowed to consider and negotiate his employment benefits, which means he could influence the amount of contributions his employer makes for his benefit.
Car Co must record the extra $10,000 contributions as reportable employer super contributions on Yoruba's payment summary.
Employee choices
If you can choose for your employer to make contributions to your super fund above their compulsory contributions, these extra amounts are reportable employer super contributions.
Example 8
During the 2011-12 income year, Bertil's employer must make super contributions for him equal to 9% of his salary. Bertil can choose to have his employer contribute between 1% and 5% extra from his pre-tax income to his super fund.
Bertil completes an electronic form for his employer to contribute an extra 5%. This extra 5% is a reportable employer super contribution that Bertil's employer must report on his payment summary.
How reportable super contributions affect you
You do not include reportable super contributions in your assessable income. However, you add them back into your income to work out if you meet the income tests for the benefits, concessions and obligations we administer, such as:
- the Medicare levy surcharge threshold calculation
- the Medicare levy surcharge (lump sum payment in arrears) tax offset
- all dependent tax offsets
- the senior Australian tax offset
- the pensioner tax offset
- the Higher Education Loan Program (HELP) and Student Financial Supplement Scheme (SFSS) repayments
- deducting your non-commercial business losses
- the low income super contribution (income threshold)
- income tax concessions available to participants in certain employee share schemes.
You add your reportable employer super contribution amount but do not deduct your personal deductible super contributions when working out if you meet the assessable income test for the following offsets and benefits:
- the mature age worker tax offset
- the spouse superannuation contributions tax offset
- super co-contributions
- the low income super contribution (10% eligible income test)
- deductions for personal contributions.
What you need to do
When you complete your tax return, declare any reportable employer super contributions reported on your payment summary.
If you are entitled to a deduction for personal super contributions, claim this on your tax return.
We use this information to see whether you meet the income test for certain benefits or obligations we administer.
Employees
If your employer makes reportable employer super contributions for your benefit, they include the total amount of these contributions on your payment summary. Although you must include this amount on your tax return, you do not have to pay tax on that amount. We use it to calculate your total reportable super contributions for the income year.
If you have a salary sacrifice arrangement with your employer to forego salary in return for extra contributions to your super fund, the changes to the income tests mean either of the following:
- you may no longer be entitled to some tax offsets and deductions
- you may be entitled to a lesser amount.
We recommend that you review your pay as you go withholding arrangements with your employer. This will help you make sure the tax they withhold from your salary, wages and other income during the income year is enough to cover the amount of tax you are liable to pay.
Investors or business operators
If you are an investor or you operate a business, you may need to review your pay as you go instalment arrangements to make sure they cover the amount of tax you are liable to pay.
For more information about reportable super contributions:
If you do not speak English well and need help from the ATO, phone the Translating and Interpreting Service on 13 14 50.
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- TTY users, phone 13 36 77 and ask for the ATO number you need
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- internet relay users, connect to the NRS on www.relayservice.com.au and ask for the ATO number you need.
Last Modified: Friday, 14 September 2012
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