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The superannuation guarantee’s interaction with salary sacrificed contributions

Super guarantee's interaction with salary sacrifice

Hayley Lock and David Sofra look at a bill that would address some potential anomalies in the rules governing employers’ superannuation contribution obligations.


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Measures included in Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1) Bill 2019, would ensure that salary-sacrificed contributions to an employee’s superannuation fund:

  • would not reduce the ordinary time earnings (OTE) amount, in respect of which an employer should make superannuation contributions; and
  • would not count in assessing whether an employer had a superannuation shortfall in respect of a particular employee.

Many employees’ remuneration is set on a total remuneration package (TRP) basis. In these situations the employer has a contractual obligation to deliver an agreed value of remuneration (including superannuation contributions), and so the employee’s choice for a sacrifice contribution would typically produce the intended result of the employer simply contributing more than the statutory minimum to the superannuation fund.

The purpose of the measures in the Bill is to ensure that this happens in all cases, regardless of employer policy or how the employee’s remuneration arrangements are structured under their employment contract.

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