Generally, super contributions made by your member’s employer are included in one of the Employer contributions fields. However, this is not always the case, and you will need to implement systems and processes to distinguish between:
- employer contributions made by an employer
- personal contributions made by an employer on behalf of their employee.
You also have a duty to ensure this categorisation is understood and applied by your members and by their employers when they provide information to you. For example, you may need to work with an employer who incorrectly characterises members’ salary sacrifice contributions as personal contributions.
Employer superannuation guarantee
These are:
- contributions made by an employer specifically to meet super guarantee requirements under the Superannuation Guarantee Administration Act 1992
- any super guarantee charge we contributed for a member – these are paid in lieu of contributions that an employer failed to pay for the member
- any amounts we contributed for a member by transfer from their super holding accounts (SHA) special account – but only to the extent that they are characterised as a taxable component. The taxable component represents employer contributions (such as super guarantee charge) that we have been holding in the SHA special account for the member.
Reporting contributions from the ATO
Historically, providers have reported all contributions to the ATO including those that have been sent to them via the ATO. From 2018–19 onwards, some contributions which are sent from the ATO to you no longer need to be reported, such as government co-contributions and low income super amounts.
The contributions received by you from the ATO that are still required to be reported from 2018–19 onwards are those listed above to be included at the employer super guarantee field. Any recoveries of these amounts must also be reflected in your reporting (either through an adjustment, or a cancel and re-report).
Employer salary sacrifice
These contributions are made by the employer as a result of a salary sacrifice arrangement, where the member agrees to forgo part of their before-tax salary or wage in return for their employer providing a super benefit of a similar value.
These contributions should not be confused with compulsory member contributions made before-tax which are funding a defined benefit. These are included in the actuarial calculation of notional taxed contributions and defined benefit contributions.
Employer award
These are contributions paid in addition to those required under the super guarantee obligations imposed by industrial agreements, awards, trust deeds or governing rules.
These may include amounts contributed by an employer:
- from a member's before-tax salary, in order to meet the mandated personal contributions to an accumulation scheme (where the member's voluntary component would be reported as Employer salary sacrifice and the mandatory component reported in this field as Employer award)
- under a Commonwealth, state or territory law governing the super entitlements of public sector employees.
Employer voluntary
These are contributions made as part of a remuneration package. They may exceed the minimum legal requirements imposed by industrial agreements, awards, trust deeds or governing rules.
Alternatively they can be contributions to fund costs such as insurance premiums paid for a member, where the contributions are not mandated in accordance with Part 5 of the Superannuation Industry (Supervision) Regulations 1994.
The type of employer contributions reported may have an impact on your member's:
- liability to certain taxes – eg Division 293
- availability to participate in certain schemes – eg the FHSS Scheme where only the salary sacrificed employer contributions would be available for release.
It's important for employers and providers to correctly characterise and report each contribution, using the Employer contribution categories.
Example: insurance premiums paid by the employer
Chef Pty Ltd sponsors a super fund for its employees called Chef Super Fund. Colin is a senior employee of the company and a member of the super fund.
The trustees of the fund insure the lives of the fund’s members. The trustees are the policy holders. The aim of the insurance is to fund the super benefits payable upon Colin’s death or permanent incapacity.
Chef Pty Ltd, as employer sponsor, complies with a certified agreement to pay the fund’s annual life insurance premiums ($1,200) for Colin and does so on 1 June 2019. The insurance premium paid is in addition to the normal SG obligations for Chef Pty Ltd.
When Chef Super Fund reports for Colin for the 2018–19 financial year, it reports:
- the $1,200 insurance premium at the Employer – award field (see note)
- $4,900 at the Employer – super guarantee field
- $20,000 at the Employer – salary sacrifice field which Colin has salary sacrificed through a regular payroll deduction.
However, Chef Super Fund did not make Colin aware of the effect of these insurance premiums on his contributions.
Colin had set his salary sacrifice agreement to $20,000, which he believed kept his employer contributions (including the super guarantee component) from exceeding his concessional contributions cap of $25,000. However, with the premiums included he had exceeded the cap and was not aware until he received a letter from us about his potential liability for excess contributions tax.
Note: Where the payment or reimbursement of insurance premiums paid by the employer are made on a voluntary basis and are not mandated, there may be instances where an employer reports these insurance payments at the 'Employer – voluntary' field.
End of example