Does Salary Sacrificing Superannuation Affect Your Employer’s SGC Responsibilities?

A financial exchange is occurring between two individuals involving a couple of dollar bills and a document on the table, demonstrating the importance of accurate bookkeeping in Sydney to ensure proper financial record-keeping and accountability.

CURRENT AS AT 23 December 2019

Starting from 01st January 2020, a significant change has been implemented regarding calculating employer super guarantee obligations for employees in Sydney. Previously, when an employee chose to salary sacrifice a portion of their income, the employer could determine the 9.5% Super Guarantee (SG) based on the net salary after deducting the salary sacrifice.

However, this practise has been modified. Irrespective of the amount an employee opts for salary sacrifice, salary-sacrificed super contributions will no longer be considered when calculating the base for employer super guarantee obligations. This alteration affects the way accountants in Sydney must now calculate these obligations for their clients.

The amount of super that employers need to pay is 9.5% of the employee’s ordinary time earnings base (sum of the employee’s OTE and any sacrificed OTE amounts), without considering any amounts of the salary sacrifice.

If you have salary sacrifice arrangements, you will need to:

·         review the salary sacrifice arrangements that are currently in place, ensuring:

o   the employee’s OTE base is used to calculate the SG obligation

o   not count the salary sacrificed amounts towards the minimum amount of SG needing to be paid

·         check that the payroll system correctly calculates the SG obligation in light of these changes (in Xero, you just needed to untick the box – which reduces SGC)


For more information:—information-for-employers/

Despite this, the limit on concessional contributions of $25,000 per year is still in place, so the maximum super for each individual, whether SG or salary sacrifice, is still limited to $25,000.

As always, if you have any questions, please get in touch with your client manager to discuss.

Kreston Stanley Williamson Team

*Correct as of December 2019

Disclaimer – Kreston Stanley Williamson has produced this article to serve its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas in this article, you must seek advice about your circumstances. Liability is limited by a scheme approved under professional standards legislation.

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