Your employees may choose to enter into a salary sacrifice arrangement with you to make additional contributions to their super from their pre-tax income. The employee sacrifices a portion of their pre-tax salary which you then pay directly into their super account.
If a salary sacrifice agreement is in writing, you can claim a tax deduction for the contribution.
Non-wage remuneration is included in income tests used to determine eligibility for a range of government financial assistance programs, including family tax benefits and some Centrelink benefits.
Salary sacrifice superannuation contributions are included as income for income-testing purposes. This can affect your employees’ eligibility for the:
- Federal Government Co-contribution
- Spouse contributions rebate
- Self-employed tax deduction
However, the sacrificed component is excluded from the definition of assessable income that is used to determine the employee's PAYG tax liability.
Please note, from 1 January 2020, salary sacrificed super contributions will not:
- reduce the ordinary time earnings that you are required to calculate your employees’ super entitlement on
- count towards the amount of super guarantee contributions that you are required to make in order to avoid the super guarantee charge.
The salary sacrifice contributions included as income for the various income tests are called ‘Reportable Employer Superannuation Contributions' (RESCs). Employers are required to report their RESCs in pay-as-you-go (PAYG) annual withholding reports and in employees' PAYG payment summaries.