With the celebration of the New Year comes the potential for changes to be introduced to keep employers and businesses on their toes. One such change has been introduced as of 1 January 2020 as a result of legislation passed last year. This change impacts the calculation of superannuation, specifically for those employees who engage in salary sacrifice arrangements.
The change closes a loophole which existed which allowed employers to reduce the superannuation they paid for these employees. The new regulations make clear that that the 9.5% super payable on employee’s wages is calculated based on the pre-salary sacrifice figure. In addition, any salary sacrificed superannuation payments made by the employer do not count towards the 9.5% super owed by employers.
With the introduction of single touch payroll giving the ATO more timely information than ever and the superannuation regime still having incredibly harsh penalties for employers who even inadvertently breach the regulations, it is important you check your payroll default settings to make sure everything has been updated as necessary.
If you have any questions regarding this change or need any assistance in reviewing your payroll procedures, please do not hesitate to contact us.