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Edited version of private advice
Authorisation Number: 1052010329481
Date of advice: 4 August 2022
Subject: Superannuation - reportable employer superannuation contribution
Can employees influence an employer's obligated superannuation contributions, other than salary sacrifice amounts, under section 16-182 of Schedule 1 to the Taxation Administration Act 1953 (TAA 1953)?
This advice applies for the following period:
30 June 20XX
The arrangement commences on:
1 July 20XX
Relevant facts and circumstances
Your advice is based on the facts stated in the description of the scheme that is set out below. If your circumstances are different from these facts, this advice has no effect and you cannot rely on it. The fact sheet has more information about relying on ATO advice.
The employer has a company policy of making employer superannuation contributions at the rate of 12% for all its employees.
The employer confirms all employees are engaged under individual employment contracts that specify in part the company's policy of making superannuation contributions at the lesser of the rate of 12% or the relevant concessional contribution cap (CCC)
The employer confirms it will maintain as a minimum the current superannuation rate as set down by the Superannuation Guarantee (Administration) Act 1992 (SGAA 1992).
The employer notes that where contributions are likely to cause an employee to exceed the CCC it will contribute the lesser of the CCC or the superannuation rate as required under legislation.
The employer maintains its strict company policy does not allow employees to vary the rate of 12% and this rate is only variable by company mandated policy, the only exception is an increase by way of a salary sacrifice arrangement.
Relevant legislative provisions
Section 16-182 of Schedule 1 to the Taxation Administration Act 1953
Subsection 19(2) of the Superannuation Guarantee (Administration) Act 1992
Can employees influence an employer's obligated superannuation contributions, other than salary sacrifice amounts, under section 16-182 of Schedule 1 to the TAA 1953?
An employee's ability to vary the company mandated policy of making superannuation contributions at the rate of 12% is limited to instances that involve the implementation of a salary sacrifice agreement only.
Reportable employer superannuation contributions as set down under section 16-182 of Schedule 1 to the TAA 1953 as listed below:
16-182(1) A reportable employer superannuation contribution, for an individual for an income year, is an amount that has been, is, or will be contributed in respect of the income year:
(a) by an employer of the individual, or an associate of the employer, for the individual's benefit; and
(b) to a superannuation fund or an RSA;
to the extent that either or both of the following paragraphs apply:
(c) the individual has or has had, or might reasonably be expected to have or have had, the capacity to influence the size of the amount;
(d) the individual has or has had or might reasonably be expected to have or have had, the capacity to influence the way the amount was, is or will be contributed so that his or her assessable income is reduced.
16-182(5) For the purposes of paragraph (1)(c), treat the individual as neither having, nor being able reasonably to be expected to have, the capacity to influence the size of the amount if:
(a) the employer or associate is required to contribute the amount by:
(i) an industrial instrument; or
(ii) the rules of a superannuation fund; and
(b) the individual does not and did not have, and is not able reasonably to be expected to have or have had, the capacity to influence the content of that instrument or those rules, to the extent that the instrument or rules relate to:
(i) the requirement to contribute the amount; or
(ii) the size of the amount.
Application to your circumstances
The employer has a company mandated policy that states superannuation contributions will be made at the rate of 12%, acknowledging that this is higher than the current legislated required value. The employer acknowledges that the rate of superannuation contributions will not be less than the value set down under SGAA 1992.
The employer's policy allows only for a reduction of the rate of 12% to account for an employee's possible exceeding the concessional contributions cap (CCC). In these instances the employer will limit the superannuation contributions to the maximum relevant CCC except where the employee will continue to exceed the CCC due to the minimum superannuation contribution rate as set down SGAA 1992.
The employer's standard employment contract includes reference to superannuation contributions being made at the lesser of the rate of 12% or the relevant CCC value.
Employees confirm their agreement to the employer's policy at the time they choose to be engaged under the employer's individual employment contracts.
The only exception to the employer's policy is an employee's choice to elect to enter a salary sacrifice arrangement which allows for superannuation contributions to be paid at a higher rate as allowed for under subsection 16-182(1) of Schedule 1 to the TAA 1953.
As it is the employment contract that stipulates the rate of employer contributions to be made unless a salary sacrifice agreement is in place and the employees cannot influence the amount being paid under the employment contract, those employer contributions are not reportable employer superannuation contributions under section 16-182 of the TAA 1953.