From 1 January 2020, salary sacrificed superannuation contributions cannot be used to reduce your employer’s superannuation guarantee obligations, regardless of the amount the employee elects to salary sacrifice.

The Superannuation Guarantee charge is 9.5% of:

  • The employee’s ordinary time earnings
  • The amount salary sacrificed from the employees ordinary time earnings

Ordinary time earnings is generally what your employees earn for their ordinary hours of work. It includes things like commissions, shift loadings and allowances, but not overtime payments.

It is essential for employers to review all salary sacrificed superannuation agreements in place and ensure you are paying the correct amount of superannuation for your employees. 

Let’s use an example to demonstrate:

If an employee earns $1500 per week and has an effective salary sacrifice agreement with their employer to sacrifice $200 per week to their superannuation fund. The employer previously calculated the superannuation guarantee liability as follows:

$1,500 - $200 = $1,300

$1,300 x 9.5% = $123.00 superannuation guarantee liability

From 1 January 2020, it will be

$1,500 x 9.5% = $142.50 superannuation guarantee liability