Employee Salary Sacrificed Contributions

From 1 January 2020 employers will be required to provide superannuation guarantee (‘SG’), on the amounts an employee salary sacrifices into their own superannuation fund.


Here is an example:-

Tony receives a salary of $100,000 from his employer for his ordinary hours of work per year. His annual allowable SG would be $25,000. Tony would have an entitlement to $2,375 in SG contributions per quarter, which is determined by multiplying $25,000 by 9.5% (the current minimum SG rate).

Tony enters into a Salary Sacrifice arrangement with his employer to sacrifice $2,000 each quarter from his salary and wages.  Accordingly, Tony expects that the total concessional contributions made on his behalf to his fund will rise to $4,375 per quarter.

Under the current SG regime (ie, prior to 30 June 2020), Tony’s employer can use any salary sacrificed super contribution (eg, $2,000 per quarter) to partly satisfy their minimum SG obligations.

Additionally, the employer’s mandated SG obligations would be calculated based on an adjusted OTE base which excludes any sacrificed amounts — ie, $23,000 instead of $25,000 (ie, $25,000 minus the salary sacrifice amount) per quarter.

Thus, Tony’s employer is only obliged to pay SG contributions of $2,139 per quarter (ie, $23,000 x 9.5% = $2,139), and only $139 of this amount would be on top of his quarterly salary sacrificed amount.

After 1 January 2020 the employer will have to pay SG on the $2,000 as well.  Therefore, making the Total Superannuation going into the fund as :- $2,375 SG and $2,000 SS = $4,375