Salary sacrifice arrangements
Under an effective salary sacrifice arrangement, your employee agrees that you'll make extra super contributions for them in return for a reduced amount of salary or wages. These extra contributions are reportable employer super contributions.
Reportable employer super contributions don't include compulsory contributions, such as super guarantee amounts. You only report the sacrificed amount in excess of these compulsory contributions.
When excluding compulsory contributions, note that the super guarantee amounts you exclude are based on the employee's reduced salary. This is the case even if the salary sacrifice arrangement provides for you to continue to pay super contributions based on the employee's original salary. In this situation, your top-up contributions are included as reportable employer super contributions because they are:
- not required by a law or collectively negotiated industrial agreement
- influenced by your employee (in negotiating the salary sacrifice arrangement).
Salary-sacrificed super contributions to a complying super fund are not fringe benefits and are not included on your employee's income statement or payment summary as reportable fringe benefit amounts.
An effective salary sacrifice arrangement can't be retrospective – that is, you can't substitute benefits for salary or wages your employee has already earned.
Example: compulsory contributions set by industrial agreement
Under Jill's industrial agreement, her employer must contribute 10% of her salary to a super fund, regardless of any salary sacrifice.
Jill has a long-standing agreement with her employer to salary sacrifice an extra $10,000 of her salary to the same super fund.
Only the $10,000 additional portion of the employer contributions are reportable employer super contributions.
End of example
Example: voluntary top-up contributions
Sally and Zoe are employed by ABC Pty Ltd for remuneration of $60,000 a year.
- Sally receives her earnings of $60,000 as salary. ABC is required to pay super guarantee contributions of $5,700 (9.5% × $60,000) to her super fund.
- Zoe enters into an effective salary sacrifice arrangement with ABC and will sacrifice $10,000 of her annual earnings into her super fund. They agree that, in addition to the $10,000 she plans to salary sacrifice into her super fund, ABC will make an additional contribution of $5,700. This is the amount ABC would have been required to pay if not for the salary sacrifice agreement.
Salary and super payments
|
Sally
|
Zoe
|
Pre-sacrifice salary
|
$60,000
|
$60,000
|
Super salary sacrifice
|
–
|
$10,000
|
Reduced salary / ordinary time earnings
|
$60,000
|
$50,000
|
Required super guarantee contributions (9.5% of ordinary time earnings)
|
$5,700
|
$4,750
|
Actual employer super contributions
|
$5,700
|
$5,700
|
Reportable employer super contributions
|
Sally
|
Zoe
|
Total employer contributions (including any salary-sacrificed amounts)
|
$5,700
|
$15,700
|
Less required super guarantee contributions
|
$5,700
|
$4,750
|
Reportable employer super contributions
|
$0
|
$10,950
|
End of example
Example: bonuses paid as super
Mike's employer pays his employees a bonus each year if they meet their performance targets.
Under a long-standing salary sacrifice agreement, Mike has asked to have any bonus paid into his super fund. If a bonus is payable and is paid into Mike's super fund, the amount is a reportable employer super contribution.
End of exampleSee also:
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