Institute of Certified Bookkeepers
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May 2015 Question of the Month - SGC and RESC

  • 127 posts
  • # 113001

An employee makes a significant salary sacrifice to superannuation. The employer has been paying Superannuation Guarantee Contribution on the gross wages. The accountant has advised that the difference between the 9.5% SGC and the amount paid in total is Reportable Employer Superannuation Contributions. Is he right?

  • 127 posts
  • # 113245

An amount of super paid to the fund is considered RESC only when the employee has influenced the decision. In this situation, it sounds like the employer has paid a default amount of 9.5% on gross wages without negotiation with the employee. Therefore it would be considered as “employer additional” contribution, not “employee additional”, and therefore not RESC.

It is true that when part of the salary is sacrificed to super, the employer is obliged to pay SGC only on the reduced salary. However, this is defined as the “minimum” amount of SGC required. The ATO does not state that SGC paid on gross wages when there is a salary sacrifice arrangement is automatically reportable.

It would be reportable if the employer advised the employee they would reduce their SGC obligations to the minimum required, and the employee then specifically negotiated to have the employer continue to pay SGC on the gross wage. The difference between the total amount and the minimum required would then be considered as RESC.

Either way, the employer is not losing out, because they would have calculated SGC on the full wage and this would have been budgeted for already.

Related References



Edited at 21 Jun 2016 02:50 AM GMT

  • Member in Practice
  • Practice Certificate
  • 5 posts
  • # 113634

Hmm … I would have said the Accountant was correct (…. for a change!)

 

My understanding is that on the Payment Summary, Reportable (Salary Sacrifice) Fringe Benefit Assets are shown at RFB & the same applies for (Salary Sacrifice) Super to be shown as RESC. 

That is, any amount that provides a tax benefit to the employee.

 

When checking out your link - ICB – Reportable Employer Superannuation Contributions, the below quoted from 2. If RESC is wrong, does it matter? appears to support this:

We Quote from the ATO Website:

Incorrect amounts at reportable employer super contributions on payment summaries.

Some employers have been incorrectly including compulsory super amounts as reportable employer super contributions on their employees’ payment summaries, such as:

  • super guarantee contributions
  • industrial agreement (award) super contributions

Reportable employer super contributions should only include additional super contributions made by an employer, for example super contributions made on behalf of an employee under a salary sacrifice arrangement.

This was the scenario in this month’s Question.

 

In summary:

Any Super above the award-stated compulsory SGC amount - either paid directly by the Employer or paid by the Employer from the employee’s gross pay (Salary Sacrifice) - I would be classifying as RESC.

The only non-compulsory Super I would not be including would be any after tax contributions (eg from employee’s net pay) on behalf of the employee.



Edited at 19 Aug 2016 08:32 AM GMT

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