• Super guarantee payments

    If your employee is an eligible employee for super guarantee purposes, you're required to make super guarantee payments for them. Super guarantee is 9.5% of an employee's 'ordinary time earnings' each quarter (up to the maximum contributions base for that quarter).

    If you make super contributions for your employee under an effective salary sacrifice arrangement:

    Super guarantee is based on the reduced salary

    The minimum amount of super guarantee you're required to pay for your employee is based on their ordinary time earnings. As entering into a salary sacrifice arrangement reduces your employee's ordinary time earnings, it will reduce the amount of super guarantee that you're required to pay.

    Salary-sacrificed amount counts towards super guarantee

    Super contributions to an employee's fund under an effective salary sacrifice arrangement are counted as employer contributions. This means the salary-sacrificed amount counts towards your super guarantee obligation.

    If the salary-sacrificed super contribution is more than the minimum super guarantee amount you're required to pay, you don't have to pay an additional amount to meet your super guarantee obligations. However you may have a contractual obligation under the salary sacrifice agreement to pay both.

    Some awards or agreements require an employer to pay a certain amount of super for an employee, or to pay super on the employee's pre-sacrifice salary. In these circumstances, salary-sacrificed amounts may not reduce the employer's super guarantee obligation as stated in the award or agreement.

    Example

    Sally and Zoe start work with the same organisation for remuneration of $60,000 a year. Zoe decides to enter into an effective salary sacrifice arrangement with her employer and will sacrifice $10,000 of her annual earnings into her super fund. Sally receives her earnings of $60,000 as salary.

    Sally and Zoe are both eligible employees for super guarantee purposes, and their employer is required to contribute a minimum amount into their super funds – that is, 9.5% of their ordinary time earnings. Sally and Zoe's salaries equal their ordinary time earnings.

     

    Sally

    Zoe 

    Pre-sacrifice salary

    $60,000

    $60,000

    Less super salary sacrifice

    $10,000

    Reduced salary / ordinary time earnings

    $60,000

    $50,000

    Minimum 9.5% super guarantee

    $5,700

    $4,750

    Employer super contributions

    $5,700

    $10,000

    Total salary and super

    $65,700

    $60,000

    As Zoe 's salary-sacrificed amount of $10,000 is an employer contribution and is more than the super guarantee amount the employer is required to pay, the salary-sacrificed amount satisfies her employer's super guarantee obligation. This means Zoe 's employer is not required by law to contribute an amount to her super fund in addition to the salary-sacrificed amount of $10,000.

    Zoe and her employer may agree that her employer will continue to make additional employer contributions equivalent to the super guarantee that would have been payable if not for the salary sacrifice agreement.

    End of example

    Payments can be based on pre-sacrifice salary

    You can make voluntary employer contributions of more than the minimum required super guarantee amount, and claim a tax deduction for them.

    If you or your employee would like super guarantee payments to be based on their earnings before salary sacrificing, you'll need to negotiate this as part of the salary sacrifice agreement or employment contract.

    Example (continued)

    Zoe and her employer agree as part of her salary sacrifice arrangement that, in addition to the $10,000 she plans to salary sacrifice into her super fund, her employer will make an additional contribution of $5,700. This is the super guarantee amount the employer would have been required to pay based on Zoe 's pre-sacrifice salary of $60,000.

     

    Sally

    Zoe 

    Reduced salary / ordinary time earnings

    $60,000

    $50,000

    Employer super contributions

    $5,700

    $10,000

    Agreed additional employer contribution

    $5,700

    Total salary and super

    $65,700

    $65,700

     

    End of example

    When to pay contributions

    You're required to make super guarantee contributions for each eligible employee by the quarterly payment cut-off dates. This applies only to the minimum super guarantee amount you're required to pay under the law.

    If all or part of an employee's salary-sacrificed contributions is used to meet your super guarantee obligations, these amounts must also be with the super fund by the payment cut-off dates.

    Salary sacrifice contributions must be paid into the super fund by the 28th day after the end of the month in which the salary-sacrificed amount is withheld from the employee’s salary.

    Some industrial awards and super funds require employers to make super contributions for their employees more regularly than the quarterly payments required under the super guarantee law.

    See also:

      Last modified: 27 Jul 2016QC 17235