Until recently, loopholes in compulsory superannuation allowed an employer to count salary-sacrificed amounts towards the employer’s compulsory superannuation contribution. Furthermore, an employer could also calculate their compulsory superannuation based on the post-salary sacrifice income, rather than the full employee’s earnings. This could dramatically reduce the employer’s compulsory superannuation obligations.
From 1 January 2020 the law has changed to close this loophole. Now salary-sacrifice superannuation contributions can’t be used to reduce the employer’s compulsory superannuation, nor can the employer use the post-salary sacrifice income to calculate their obligations. Employers must now calculate super guarantee on all ordinary times earnings including any amounts salary-sacrificed to super.
To see other March 2020 Client Alerts, go here.