Update For Super Guarantee
ATO’s new super guarantee requirements
From 1 January 2020, if you make super contributions for your employees under an effective salary sacrifice arrangement:
- You must calculate your super guarantee obligation based on your employee’s ordinary time earnings base
- You cannot count salary sacrifice contributions towards the minimum amount of super guarantee you have to pay
Super guarantee calculated on ordinary time earnings base
The minimum amount of super guarantee you’re required to pay for your employee is calculated on their ordinary time earnings base. This is the sum of your employee’s OTE (ordinary time earnings) and any sacrificed OTE amounts.
From 1 January 2020, entering into a salary sacrifice arrangement will not reduce your employee’s ordinary time earnings base, and therefore it will not reduce the amount of super guarantee that you’re required to pay.
Salary-sacrificed amounts do not count towards super guarantee
From 1 January 2020, super contributions to an employee’s fund under an effective salary sacrifice arrangement do not count towards your super guarantee obligation.
Sample scenario of Salary-sacrifice and Super Guarantee comparison
Sally and Zoe start work with the same organisation for the 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 a salary.
Sally and Zoe are both eligible employees for super guarantee purposes. 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.
From 1 January 2020, Zoe would be paid the same amount of super guarantee as Sally because the employer can no longer use the salary sacrifice agreement to satisfy or reduce their obligation.
| Calculation of total salary and super | ||
| Calculation item | Sally | Zoe |
| Pre-sacrifice salary | $60,000 | $60,000 |
| Super salary sacrifice | $0 | $10,000 |
| Reduced salary | $60,000 | $50,000 |
| Minimum 9.5% super guarantee | $5,700 | $5,700 |
| Total employer super contributions | $5,700 | $15,700 |
| Total salary and super | $65,700 | $65,700 |
When to pay super guarantee contributions
You’re required to make super guarantee contributions for each eligible employee by the quarterly payment due dates. This applies only to the minimum super guarantee amount you’re required to pay under the law.
Quarterly payment due dates for super payments
| Quarter | Period | Payment due date |
| 1 | 1 July – 30 September | 28 October |
| 2 | 1 October – 31 December | 28 January |
| 3 | 1 January – 31 March | 28 April |
| 4 | 1 April – 30 June | 28 July |
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.
If you have any questions about Super Guarantee payments or salary sacrifice, please contact our consultants at W Wen & Co
NOTE: This information is from the ATO website
https://www.ato.gov.au/Business/Super-for-employers/In-detail/Salary-sacrifice/Salary-sacrificing-super—information-for-employers/?page=3#Whentopaycontributions