The ATO has provided employers with a recent reminder that, from 1 January 2020, there has been a legislative change to ensure that when an employee sacrifices pre-tax salary in return for an additional concessional contribution into superannuation, it will not result in a reduction in the 9.5% Superannuation Guarantee (‘SG’) obligation their employer has even though doing so reduced their Ordinary Time Earnings.

The ATO has provided information for employers, payroll software providers, and intermediaries who may need to change the way they calculate SG.

The ATO advises that from 1 January 2020, you calculate the minimum amount of SG on the employee’s ‘OTE base’. This is the sum of the employee’s OTE and any OTE amounts they sacrifice in return for super contributions.

Additionally, super contributions to an employee’s fund under an effective salary sacrifice arrangement no longer count towards an employer’s super guarantee obligations.

Find out more about super for employers on the ATO website.

If you have any concerns regarding super contributions, feel free to contact our office on (08) 9392 7600 and speak to one of our agents.