Salary Sacrifice Super Changes in 2020

  • Post published:29/12/2019
Salary Sacrifice Super Changes in 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!