Institute of Certified Bookkeepers
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July 2013 - Last payroll has been run for the year and an employee decides he wants to pay extra super - What do you Do?

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The fortnightly and last payrun for the year has been finalised. My client, an employee of the company, wishes to pay an extra $11,000 towards his super to bring up to the maximum of $25,000 for the year. A cheque is drawn and made out to the super company for this amount and presented to the bank by 20th June.

What are the implications? - RESC, grossed up and the amount salary sacrificed, employer additional contribution, and how is it entered in MYOB?

What do you do?

  • Fellow in Practice
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  • 283 posts
  • # 93431

ICB's Response:

This question requires more information before you can answer it.

There are many possibilities.

Is this a one-off before tax payment?
Then this is a RESC payment and is shown on the payment summary.

Is this an after tax payment?
If this is an after tax payment then it would not be considered RESC and would be not show on the payment summary. This would be entered under MYOB as employee additional super. You mention “grossed up”—are you referring to grossing up the net amount paid to being the gross amount of wages before tax?

You will need to calculate the amount of gross wages to be paid and therefore the amount of tax to be withheld if this is an after tax payment. Divide the extra amount of $11,000 by 52 (assuming it is a weekly employee), add this amount to his current net pay, check the tax tables for the corresponding gross amount. Calculate what has been paid in tax against what should have been withheld, then add this to the net amount to arrive at the gross amount.

Has it been paid as a bonus by the company?
If so then this could be a RESC payment and as such reported on the payment summary as they are salary sacrificing the full amount. In this situation 9.25% would also be payable on the gross wage, which would need to be taken into account if the employee doesn’t want to go over the threshold.

Note on Super Salary Sacrifice arrangements
Salary sacrifice is an arrangement where an employee agrees to forego part of their future salary or wages in return for their employer providing benefits of a similar value. Subject to your agreement, an employee can sacrifice their salary or wages into a variety of benefits, including super. Bonus payments, although often paid for work already done, can be sacrificed to superannuation.

What if it’s a SMSF, are the rules any different?
Provided the governing rules of the fund allow it, a SMSF can generally accept employer contributions, personal contributions, salary sacrifice contributions, co-contributions and eligible spouse contributions.

The payment should be properly documented with a breakdown of the amount and type of contribution.

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