If you salary sacrifice into a complying super fund, the amount sacrificed is not a fringe benefit for tax purposes or subject to fringe benefits tax. They are however, reportable superannuation contributions.
No. From 1 January 2020, salary sacrificed super contributions can't be used by your employer to reduce their super guarantee, regardless of the amount you choose to salary sacrifice. This means the salary sacrificed amount does not count towards your employer's super guarantee (SG) obligations.
Joe earns $50,000 before tax, and his SG contribution is $4,750 making his total salary package $54,750. Joe decides he wants to salary sacrifice $5,250 to his super in addition to the SG payments he already receives. The total concessional contribution will be $10,000. In Joe’s case:
- Joe’s total salary package including super is still $54,750.
- Joe’s assessable income is reduced by $5,250 and he therefore will pay less income tax.
- The employer’s total super contribution on behalf of Joe is $10,000 (note: this will be a concessional contribution), and
- Joe’s employer’s tax deductions will remain unchanged.
The benefits of a salary sacrifice into super come from increasing the employer contribution amount above the compulsory Superannuation Guarantee amount without increasing the cost to the employer. However when you go into a salary sacrifice arrangement into super, it is important to make sure both you and your employer understand what the total employer contribution and the effects to your overall salary package will be.
Salary sacrifice arrangements are made between you and your employer on terms that both parties agree to. The agreement should be in writing. Your employer is required to make SG contributions into your super fund at least four times a year. Where additional contributions to super are made, whether from your before or after tax income, they should be remitted to the fund within 28 days of the end of the month to which the contributions applied.
If you qualify for the super co-contribution, it may be worthwhile looking into making a personal (Non Concessional) contribution from your after tax income. As salary sacrifice into Superannuation is a reportable contribution, the amount sacrificed must be added back to income to determine eligibility to the Co-Contribution.
For information visit the ATO website at www.ato.gov.au