Salary Sacrifice Super Changes 2020
From 1 January 2020:
- Salary sacrificed super contributions can't be used to reduce employers' super guarantee obligations. This is regardless of the amount your employee elects to salary sacrifice.
- Super guarantee will be 9.5% of the employee's ordinary time earnings (OTE) 'base'.
We recommend you:
Review your salary sacrifice arrangements to make sure you are:
- Using your employee's OTE base to calculate your SG obligation
- Not counting salary sacrificed amounts towards the minimum amount of SG you have to pay
- Check that all your systems correctly calculate your SG obligations.
- Get in touch with your tax agent to get super advice based on your specific circumstances.
Example from the ATO:
Employer adjusts arrangement to ensure amounts salary sacrificed are now included in the employee's OTE base.
Sharon earns $2,000 a week and has an effective salary sacrifice agreement with her employer to sacrifice $250 to her superannuation fund each week. Sharon's salary only comprises OTE amounts.
Sharon’s employer previously calculated his SG liability on Sharon's after salary sacrifice wage as follows:
- $2,000 − $250 = $1,750
- $1,750 × 9.5% = $166.25 SG liability
From 1 January 2020, Sharon’s employer must calculate the SG liability on her OTE base which includes the salary sacrificed OTE amounts. The calculation is:
- $2,000 × 9.5% = $190.00
This is in addition to the $250 Sharon salary sacrifices each week.
Sharon’s employer makes the following payments to her super fund:
- salary sacrificed amounts of $250 each week (as per agreement)
- SG contributions of $2,470 each quarter ($190 × 13 weeks)
Please get in touch with us if you'd like to talk to our superannuation experts about your obligations!