Getting money into super
An employer is required to make an employer contribution satisfying their SG liability into a complying superannuation fund for the benefit of the employee.
Employer contributions by definition include all deductible employer super contributions made by an employer for the benefit of an employee.
Superannuation contributions made under a salary sacrifice arrangements are employer contributions. Prior to 1 January 2020, the salary sacrificed super contributions is over the super guarantee amount the employer is required to pay (9.5% of the ordinary time earnings), the employer is not required under super guarantee legislation to pay an additional amount on top.
However, from 1 January 2020, employers will be required to pay super guarantee contributions of 9.5% of the ordinary time earnings, to avoid the SG charge, in addition to their salary sacrificed amount.
An employer may be required to make employer contributions in accordance with an industrial agreement.
Employer contributions made in accordance with an industrial agreement can count towards the employer's SG obligation provided they are made in the relevant quarter or represent a pre-payment of SG contributions made within 12 months prior to the quarter.
Where contributions made under an industrial agreement are less than the employer's SG obligation for the quarter, the employer will need to make an employer contribution to cover any shortfall.
This technical resource is intended for the use of financial advisers only. It is current as at the date of publication but may be subject to change. This publication has been prepared without taking into account a potential investor's objectives, financial situation, needs or objectives. Before making a recommendation based on this material, you should consider its appropriateness based on the client's objectives, financial situation and needs. Rainmaker Group is not a registered tax agent under the Tax Agent Services Act 2009. Your client should refer to a registered tax agent before relying on information published herein that may impact their tax obligations, liabilities or entitlements.
Last modified: Tuesday, November 3, 2020