An employer's guide to reportable superannuation contributions

Superannuation forms an essential part of employee compensation in Australia, but not all super contributions are the same when it comes to reporting. A reportable superannuation contribution (RSC) refers to a specific type of super contribution. For example, a salary sacrifice contribution or additional contribution an employer makes to an employee's super fund beyond the compulsory Superannuation Guarantee (SG).

In this article, we define reportable superannuation contributions, clarify which types of employer contributions fall into this category, and detail why it’s important for employers to report RSCs accurately. By understanding your legal obligations and the impact of reportable superannuation contributions on your employees' taxable income and entitlements, you can stay compliant and avoid costly penalties.

All information contained in this article is accurate as of 10.10.2024. For the most up-to-date information, please refer to the Australian Taxation Office.

What are reportable superannuation contributions?

Reportable superannuation contributions are specific types of superannuation contributions that employers must report to the Australian Taxation Office (ATO). These include super contributions made through salary sacrifice arrangements or any additional contributions made by an employer on top of the compulsory contributions under the SG. The key point to note is that reportable super contributions affect an employee’s assessable income, so it’s vital for employers to calculate and report them accurately.

What qualifies as reportable employer superannuation contributions?

Here’s a breakdown of which superannuation contributions qualify as reportable and which don't:

Qualifies as reportable

• Salary sacrifice contributions: These contributions occur when an employee arranges with their employer to have a portion of their pre-tax income directed into their superannuation fund.
• Additional employer contributions: These are any super contributions an employer makes beyond the SG requirements, such as those under a special agreement or arrangement.

Doesn't qualify as reportable:

• Compulsory SG contributions: These are the standard 11.5% (as of 1 July 2024) contributions that there's a legal requirement for employers to make under the Superannuation Guarantee.
• After-tax employee contributions: These are voluntary personal contributions employees make to their superannuation fund from their post-tax income, independently of their employer.

Importance of reporting RSCs

Employers have a legal obligation to report reportable superannuation contributions to the ATO. Accurate reporting is imperative because these superannuation contributions directly affect an employee’s taxable income. As salary sacrifice and additional employer super contributions are pre-tax, they increase the employee’s reportable income. This can impact the results of the income tests the government uses to determine eligibility for means-tested benefits, like family tax benefits and the Medicare levy surcharge.

Failure to report RSCs correctly can result in non-compliance, penalties for the employer, and potential adjustments to an employee’s tax obligations and entitlements.

How to calculate and report RSCs

Here’s a step-by-step breakdown of how to calculate reportable employer super contributions, including an example:

1. Identify salary sacrifice contributions: If an employee arranges to salary sacrifice a portion of their pre-tax income into their superannuation, you can calculate the total amount directed into their super fund. For example, if an employee earning $80,000 annually chooses to salary sacrifice $10,000 into super, this $10,000 is reportable.
2. Determine additional employer contributions: For example, if the SG rate is 11.5%, and you contribute 13% of the employee’s ordinary time earnings, you must report the additional 1.5% as reportable superannuation contributions.

Example: Let’s say an employee earns $80,000 per year, and the SG rate is 11.5%. The required SG contribution would be $9,200 (11.5% of $80,000). However, if the employee salary sacrifices $10,000 and you agree to contribute an additional 1.5%, bringing the total contribution to 13% (or $10,400), the reportable contributions would be:

• Salary sacrifice: $10,000
• Additional employer contribution: $1,200 ($10,400 - $9,200)

As such, the total reportable superannuation contributions you report would be $11,200.

Reporting RSCs through Single Touch Payroll

Once you calculate the reportable superannuation contributions, you must report them through Single Touch Payroll (STP). This system allows you to report payroll and superannuation information to the ATO in real-time, each time you run payroll. When submitting payroll data via STP, be sure to categorise and report salary sacrifice and additional employer contributions accurately to ensure compliance.

Superannuation reporting done right with Rippling

Accurate calculation and reporting of reportable employer super contributions is key to staying compliant with the ATO and ensuring the correct management of your employees’ taxable income. Any errors in reporting salary sacrifice or additional employer contributions can lead to costly penalties, making it essential for you to maintain accuracy in every payroll cycle.

Using tools like Rippling, which integrates payroll with STP, can help you automate the process of calculating and reporting RSCs. Rippling simplifies payroll management, reduces manual errors, and keeps your business compliant with reporting obligations. And that's just scratching the surface. Rippling's all-in-one platform empowers your business to increase savings, automate routine tasks, and make smarter decisions by seamlessly managing payroll, HR, IT, and expenses all in one place.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.