Salary Sacrifice Super Changes In 2020

The changes to Salary Sacrifice Super Contributions and obligations that all employers need to know about in 2020.

From 1 January 2020:

Salary sacrificed super contributions can’t be used to reduce employers’ super guarantee obligations, even with the amount your employee elects to salary sacrifice.
Super guarantee will be 9.5% of the employee’s Ordinary Time Earnings (OTE) ‘base’.

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:

An employer adjusts your arrangement to include salary sacrificed amounts in your 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 and Sharon’s after salary sacrifice wage is 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 to talk to our superannuation experts about your obligations!

This is general advice only and has not been prepared with your situation and needs in mind. For individual and personalised advice, we highly recommend that you seek out proper professional advice from your accountant.