Edited version of private advice

Authorisation Number: 1012663229150

Ruling

Subject: Reportable employer superannuation contributions

Question

Is the reportable employer superannuation contribution for each employee to be reported calculated as the difference between the total superannuation contributions less their ordinary times earnings (OTE)?

Answer

No.

This ruling applies for the following period:

Year ended 30 June 2014

Year ending 30 June 2015

Year ending 30 June 2016

Year ending 30 June 2017

Year ending 30 June 2018

The scheme commenced on

1 July 2013

Relevant facts and circumstances

Salary sacrifice arrangements - Your employees who have entered into effective salary sacrifice arrangements. These arrangements involve the packaging and payment of novated leasing payments, motor vehicle operating costs, superannuation contributions, fringe benefits tax and other payments such as subscriptions, club memberships and the use of mobile phones.

Novated leasing - Novated leasing agreements are entered into by some employees. A novated leasing agreement is one entered into by three parties, an employee and a leasing company. Relevantly, the leasing agreement provides that while ever the employee is employed by you then you are liable to make payments to the leasing company that would otherwise be the responsibility of the employee.

Fuel purchases - The motor vehicle operating costs include fuel which is purchased by the employee using a fuel card. The employee purchases fuel at a fuel station and the amount is charged to your account with that fuel company. You as the purchaser of the fuel, is the entity to whom the fuel company looks for payment and that you are not acting as an agent for the employees or purchasing fuel on their behalf using the fuel company's fuel account as a mere convenience.

Superannuation contributions - The amounts contributed to the employees' superannuation fund as part of an effective salary sacrifice arrangement are greater than the minimum compulsory superannuation contribution of 9.25% of ordinary times earnings (OTE). The employee elects the amount of superannuation contribution to be made. Accordingly the amount paid to a superannuation fund on behalf of the employee comprises components Employer SGC contribution on 'ordinary time earnings' and Reportable Employer Superannuation Contributions.

Post tax contribution - It is also common that employees who are paid a BUS will make a post-tax employee contribution in order to reduce the fringe benefits tax (FBT) amount otherwise payable by you down to $nil and council will effectively charge back to the employee the cost to you of the GST council is liable to pay on the employee contribution.

Business Use Subsidy - In addition to providing certain employees with flexible salary sacrifice arrangements you also pay to some employees a business use subsidy (BUS) for the general use by you of the employee's novated lease vehicle. Those who enter into a BUS agreement are required to make their novated lease vehicle available for use by other employees, somewhat akin to a car pooling arrangement. The BUS amount is a maximum of $X per annum but may be reduced depending on the actual operating costs of an employee's vehicle.

Form of election - as part of the agreement entered into for the employment of the employees a form of election is completed and signed by the employee which stipulates the total value of the salary package and its various components.

Relevant legislative provisions

Taxation Administration Act 1953 section 16-182 in Schedule 1

Reasons for decision

Subsection 16-182(1) of Schedule 1 to the Taxation Administration Act (TAA) states:

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.

Subsection 16-182(2) of Schedule 1 to the TAA states:

However, an amount is not a reportable employer superannuation contribution to the extent that it is included in the individual's assessable income for the income year.

In your circumstances you contribute amounts that they have had the capacity to influence namely, salary sacrifice amounts to a Retirement Savings Account (RSA) for your employees. Therefore the amount to be recorded as reportable employer superannuation contributions is calculated as the difference between the total employer super contributions paid on behalf of your employee less the compulsory super contribution calculated on the employee's total remuneration.