Pam Roberts
Technical

New reporting obligations for employers - Reportable Employer Superannuation Contributions

By Pam Roberts – Technical Services Manager

Employers will need to include a new amount on payment summaries for the financial years commencing 1 July 2009 and onwards.

The new amount is called a “Reportable Employer Superannuation Contribution” (RESC). The bill to introduce these changes (Tax laws Amendment [2009 Measures No1] Bill 2009) has recently been introduced to Parliament.

The new reporting requirements relate to payment summaries issued for the 2009/10 tax years. Therefore in most situations it will apply to payment summaries issued after 30 June 2010.

However, many employees may require details of their RESCs in advance, as this amount will be included in 2009/10 income estimates for Family Tax Benefits A and B.

What are Reportable Employer Superannuation Contributions?

These are employer contributions where the employee has the capacity to influence the size of the contributions and/or the form of the contributions.

Contributions required by Superannuation Guarantee (SG) and industrial agreements/awards/ payroll arrangements are excluded from RESCs.

The Explanatory memorandum sets out a number of examples, including:

  • L has 9% total remuneration contributed to super as employer contributions under a workplace industrial agreement she cannot influence. She can however elect to salary sacrifice in addition to that. The $5000 she elects to salary sacrifice is RESC.
  • W has 9% SG contributions paid to super for him and has an additional amount of $10,000 in his remuneration package that he can elect to take as employer super or other benefits. He takes the $10,000 as super. RESC is $10,000.
  • A has salary of $100,000 and works $1000 overtime. The payroll system automatically pays 9% on $101,000 even though legally there is no SG on $1000 overtime. A has no influence on the extra amount so no RESC.
  • T is able to influence the amount of super her family company can contribute for her. The employer contribution is $5940 (9% of her total remuneration of $66,000). The SG amount is $5400 (9% of her OTE of $66,000). RESC is $540.
  • R is a member of an employer sponsored defined benefit fund. The rules provide she must personally contribute 7% salary however she can elect to pay this (grossed up by contributions tax) from pre-tax salary. If she takes the pre-tax option this amount will be treated as RESC.

The RESC default calculation is: Actual employer contributions (pre-tax contributions), less the amount legally required to be paid under the Super Guarantee.

For example, Paul has a total salary package of $100,000 with full flexibility. However he must allocate sufficient funds to super to meet the employer’s SG obligation. He packages a car (cost $15,000) and $12,000 in employer super. Net salary $73,000. SG obligation is $6,570. RESC is $5,430.