Changes from 1 January 2020

From 1 January 2020, salary sacrificed super contributions can't be used to reduce your super guarantee obligations, regardless of the amount your employee elects to salary sacrifice.

This means the salary sacrificed amount does not count towards your super guarantee (SG) obligations.

A further change is that the super guarantee will be 9.5% of the employee's ordinary time earnings (OTE) 'base'. The base is the sum of:

  • the employee's OTE
  • the amount salary sacrificed from the employee's OTE.

You need to:

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.

Example: 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)

Click here for further information on rules for an effective salary sacrifice arrangement

Source: ATO