Reportable contributions
Reportable employer super contributions (RESC) aren't included in your employee's assessable income. They don't affect the way you calculate super contributions for your employees.
The following employer super contributions are reportable:
- additional contributions as part of an employee's individual salary package
- additional contributions under a salary sacrifice arrangement
- pre-tax amounts paid to an employee's super fund at the employee's direction, such as directing an annual bonus into super.
You must report extra contributions if:
- your employee can influence the rate or amount of super you contribute for them; and
- the contributions are in addition to the compulsory contributions you must make under
- super guarantee
- a collectively negotiated industrial agreement
- the rules of a super fund
- federal, state or territory law.
The extra contributions are reportable super contributions for employees, unless you show that:
- the extra contributions are made for administrative simplicity
- a documented policy is in place that doesn't allow an employee to influence the contributions you make on their behalf.
Example: extra contributions – individual employment contract
Adnan is an employee of Johnson Pty Ltd. While negotiating his individual common law employment contract Johnson Pty Ltd agrees to pay Adnan super contributions of 12% of his salary.
Johnson Pty Ltd has no policy about the employer contributions it pays for its employees. It allows employees to negotiate any rate of employer contribution they wish over the super guarantee rate required by law. Adnan and the other employees have contributions made on their behalf at varying rates.
Johnson Pty Ltd must record the extra contributions made for Adnan as reportable employer super contributions. In the 2022–23 financial year, Adnan's ordinary time earnings (OTE) are the same as his salary, so the amount recorded is 1.5% of Adnan's salary. That is, the amount that is additional to the minimum contributions Johnson Pty Ltd must make under super guarantee law.
Summary:
- Additional contributions equals employee individual salary package.
- Johnson Pty Ltd must record extra contributions.
- Johnson Pty Ltd must make 1.5% additional contributions.
Example: non-arm's length agreement
Tula is an employee and director of MGK Pty Ltd. Tula's employment conditions are governed by an industrial agreement. The agreement was negotiated between Tula and the other employees of MGK Pty Ltd.
The other employees are Tula's husband and their 2 adult children. There was no external involvement in the negotiation of the agreement. It was not made at arm's length. The agreement requires MGK Pty Ltd to make super contributions equal to 15% of the employees' salaries to super.
The employer contributions made on behalf of Tula and her fellow employees are required under the terms of an agreement. The agreement wasn't negotiated at arms' length. Therefore, Tula and the other employees could influence the contributions. For all 4 employees, MGK Pty Ltd must report the difference between the minimum amount required to meet super guarantee obligations and the amount paid under the industrial agreement.
Summary:
- Industrial agreement is not negotiated at arm's length.
- Employees can influence the super contributions.
- MGK Pty Ltd must report the difference between the minimum amount required to meet SG obligations and the amount paid under the agreement.
Example: employee influence on outcome
Under Jill's industrial agreement, she is required to contribute 5.75% of her OTE to an industry super fund. Jill can make the contribution from either her pre-tax or post-tax income. She decides to make the contribution from her pre-tax income.
While Jill's contribution is in accordance with her industrial agreement, she has the capacity to influence the way that the amount is contributed so that her assessable income is reduced. This amount is a reportable employer super contribution.
End of exampleNon-reportable contributions
The following employer super contributions are not reportable:
- super guarantee contributions
- contributions required by collectively negotiated industrial agreements
- matching contributions under a collective agreement (matching contributions under an individual agreement are reportable)
- to a defined benefit fund (exceptions may apply)
- contributions required by super fund rules or a law
- extra contributions that the employee could not influence, such as extra contributions for administrative simplicity or accepted employer policy
- contributions from the employee's after-tax income.
Example: industrial agreement without employee influence
Amanda operates a business employing 20 workers. Under their industrial agreement, Amanda must contribute 13% of her employees' OTE to a super fund, which is more than the amount required under super guarantee law.
Apart from voting on the agreement, Amanda's employees have no influence over the amount of super she contributes. This means that the super contributions Amanda makes for her workers aren't reportable employer super contributions.
End of exampleExtra contributions without employee influence
You could pay more super than required because of:
- an employer policy or similar arrangements
- administrative or payroll simplicity.
If your employee can't influence these contributions, they are not reportable. It doesn't matter if the employee is employed under a collectively negotiated industrial agreement or individual employment contract.
Example: extra contributions under employer policy
Clarke Pty Ltd employs different types of workers on individual contracts and collective industrial agreements. Clarke Pty Ltd has always paid employer contributions at a minimum rate of 15% of their employee's salary. This is regardless of the type of agreement. Employees aren't able to negotiate an employer contribution rate lower than 15%.
The company policy is long-standing and is documented in Clarke Pty Ltd's record-keeping system. No employee is receiving less than 15% employer contribution support.
The 15% employer super contributions aren't reportable because the employees have no influence over the contribution rate.
If employees do have the power to vary their employer contribution rate, the amounts over any compulsory contributions made will be reportable employer super contributions.
Summary:
- Clarke Pty Ltd pays employer super contributions at 15% of employees' salary.
- The 15% employer super contributions aren't reportable.
- In accordance with company policy, employee contributions over the compulsory 15% are reportable.
Keeping records
You must keep records to show whether your employee influenced the super contributions you made on their behalf.
This includes records of:
- how you calculated reportable employer super contributions
- how you calculated the employee-influenced portion of the total employer contribution
- how you calculated your employee's salary or ordinary time earnings (OTE)
- relevant salary sacrifice agreements
- relevant industrial agreements.
You must keep your records:
- for 5 years after they are prepared, obtained, or the transactions are completed – whichever occurs last
- in English, or in a form we can access and understand, so that we can work out the tax you're liable to pay.
Information for your employees
Reportable employer super contributions aren't included in your employee's assessable income. However, these contributions are included in the income tests for a range of government benefits and obligations.
What your employees need to do
Your employees must include the reportable employer super contribution amount on their tax returns.
The information will be pre-filled on their tax return if they complete their return online and you have:
- finalised your data through Single Touch Payroll
- sent us your PAYG payment summary annual report.
If not, your employee will need to copy the amount to their tax return.
We will calculate their entitlements or obligations by including the reportable employer super contribution in certain income tests.
Effect on benefits and obligations
Reportable employer super contributions are included in the income tests for:
- some benefits and obligations administered by CentrelinkExternal Link and the Child Support AgencyExternal Link
- the following benefits and obligations that we administer
- Medicare levy surcharge threshold calculation
- Medicare levy surcharge (lump sum payment in arrears) tax offset
- all dependant tax offsets
- senior Australians tax offset
- pensioner tax offset
- mature age worker tax offset
- spouse super contributions tax offset
- entrepreneurs' tax offset
- super co-contributions
- deduction for personal super contributions
- low income super contributions
- Division 293 tax on contributions
- Higher Education Loan Program and Student Financial Supplement Scheme repayments
- tax concessions for certain employee share schemes
- deductions for non-commercial losses.