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  • Salary sacrifice superannuation (fixed %)

 

 

ANSWER ID:9132

AccountEdge Pro and Network Edition, Australia only

This page describes how to deduct a percentage of an employee's pay to be salary sacrificed for superannuation. If an employee wants to salary sacrifice a fixed amount each pay, see Salary sacrifice superannuation (fixed $ amount).

The process described below is applicable for employees on either a salary or hourly pay basis.

In the following example, employee Sam Stickler has elected to salary sacrifice 10% of his gross monthly wage to superannuation.

 

Setting up for salary sacrifice superannuation (fixed %)
  1. Go to the Payroll command centre and click Payroll Categories.
  2. Click the Superannuation tab.
  3. Click New.
  4. Name the new category 'Salary Sacrifice 10%' or similar. You may want to add the employee's name to this, for example 'Salary Sacrifice 10% - Sam Sticker'.
  5. Select the applicable Linked payable Account, for example Superannuation Payable.
  6. Select the Contribution Type as 'Salary Sacrifice (deduction)'.
  7. Set the Calculation Basis to Equals 10% Percent of Gross Wages. The Superannuation Information window should look similar to the example shown below:
  8. Click Employee and select the applicable employee for this new deduction, in our example this would be Sam Stickler.
  9. If required, click Exempt and select all Wage Categories that you want to exclude before the Salary Sacrifice amount is calculated.
  10. Click OK to return to the Superannuation Information window, then click OK again. 

The employee's pay

The salary sacrifice amount (10% of the employee's gross salary) automatically appears as a deduction in their pay. Because superannuation salary sacrifice amounts are not generally subject to PAYG Withholding tax, AccountEdge will automatically adjust the amount of PAYG tax withheld so that the wage amount sacrificed is exempt from PAYG Withholding tax. This will reduce the amount of PAYG tax withheld from the employee's pay.

The Superannuation Guarantee contribution amount is also shown on the pay.

 

Salary sacrifice payments and payment summaries

Because salary sacrifice payments are negative values, selecting the Salary Sacrifice category as part of an employee's Gross Payments (at the Payment Summary Fields section of the Payment Summary Assistant) will reduce the Gross Payments by the salary sacrifice amount.

Salary sacrifice superannuation payments are typically also considered Reportable Employer Superannuation Contributions, so may need to be accounted for as such in the Payment Summary Assistant.

For your specific circumstances, you should always seek clarification from the Australian Tax Office (ATO) or your accountant about how to handle salary sacrifice payments on your payment summaries.

The AccountEdge help has more information on using the Payment Summary Assistant

  FAQs


What if I do not want to calculate the Superannuation Guarantee on the salary sacrifice superannuation portion of the employee's salary?

In this case the Superannuation Guarantee (expense) payroll category will need to be modified by using the Exclusions field. For example, Sam Stickler's employer does not want to calculate the superannuation guarantee on the 10% of his gross wage that he salary sacrifices each month.

To do this:

  1. Go to the Payroll command centre and click Payroll Categories.
  2. Click the Superannuation tab.
  3. Click New.
  4. Name the new category 'Super Guarantee Excluding Salary Sacrifice' or similar. You may also want to incorporate the employee's name.
  5. At the Linked Expense Account field select Superannuation Expense, and at the Linked Payable Account field select Superannuation Payable.
  6. Select the Contribution Type as 'Superannuation Guarantee (expense)'.
  7. Set the Calculation Basis to Equals 9.5% Percent of Gross Wages
  8. Type $346.67 in the field for 'Exclusions: Exclude the first $x.xx of eligible wages from calculations'. Note: This exclusion field requires a per pay period figure to be entered. In earlier software versions, this field requires a monthly figure. If this is the case and the superannuation category is being created for employees who are paid weekly or fortnightly etc., you will need to manually calculate the monthly equivalent salary sacrifice superannuation amount for this field.
  9. Set the Limit to 'No Limit' if there is no upper limit to the amount of superannuation payable under this category, or specify a limit accordingly.
  10. Set the Threshold to the appropriate amount of minimum monthly wages before superannuation calculates under this category. Currently this is $450. The Superannuation Information window will similar to the example shown below.
  11. Click Employee and select the relevant employee that you want to apply the Superannuation Guarantee category to. Note: Any employees that are selected here should be deselected from any other Superannuation Guarantee contribution expense type that no longer applies such as the standard Super Guarantee expense of 9.25% of Gross Wages.
  12. Click OK to return to the Superannuation Information window.
  13. If required, click Exempt and select any wage categories that you do not want superannuation to be calculated on.
  14. Click OK to return to the Superannuation Information window, then click OK again.

In our Alan Long example, the Superannuation Guarantee will now only calculate on the Base Hourly payment amount net of salary sacrifice superannuation, in other words $3119.99 x 9.25%=$288.51 (where $3119.99 is $3466.66 Gross Wages minus $346.67 sacrificed).

What if my hourly employees earn a different amount each pay period and I don't want to calculate the Superannuation Guarantee on the salary sacrifice superannuation portion of the employee's wage?

In this situation, two new wage categories need to be set up to replace the Base Hourly category. They will split the wage between the sacrificed amount and the net amount being paid to the employee. The Exclusions field outlined above cannot be used because the employee's wages vary from pay period to pay period, and therefore so would the amount needed to be excluded from Superannuation Guarantee calculations. However if the wage is split, the salary sacrifice portion can be excluded from Superannuation Guarantee contributions.

In this example the employee is paid fortnightly and wants to sacrifice 10% of their hourly rate each pay.

Task 1 - Setup Base Hourly 90% Wages category

This category is created to calculate the 90% of the wages that is assessable income for taxation purposes.

  1. Go to the Payroll command centre and click Payroll Categories.
  2. Click the Wages tab.Base Hourly
  3. Click New.
  4. Name the new category 'Base Hourly 90%'.
  5. Choose the Type of Wages as Hourly.
  6. Set the Pay Rate to Regular Rate Multiplied by 0.9000.
  7. Click Employee and apply the category to the applicable employee.

Task 2 - Setup Base Hourly 10% Wages category

This category is created to calculate the 10% of the wages that the employee is sacrificing.

  1. Go to the Payroll command centre and click Payroll Categories.
  2. Click the Wages tab.
  3. Click New.
  4. Name the new category 'Base Hourly 10%'.
  5. Choose the Type of Wages as Hourly.
  6. Set the Pay Rate to Regular Rate Multiplied by 0.1000.
  7. Click Employee and apply the category to the applicable employee.

Task 3 - Setup Salary Sacrifice Superannuation Deduction

This category is created to deduct back out of the employee's pay the salary sacrifice superannuation amount.

  1. Go to the Payroll command centre and click Payroll Categories.
  2. Click the Superannuation tab.
  3. Click New.
  4. Name the new category 'Salary Sacrifice 10%' or similar.
  5. Choose a suitable Linked Payable Account, for example Superannuation Payable.
  6. Select the Contribution Type as 'Salary Sacrifice (deduction)'.
  7. Set the Calculation Basis to Equals 10% Percent of Gross Wages.
  8. Click Employee and select the applicable employee for this new deduction.
  9. Click Exempt and select all Wage Categories that you do not want to be included in the Salary Sacrifice 10% amount.

Task 4 - Exempt the Superannuation Guarantee from calculating on the Base Hourly 10% Wages Category

In order to exempt the Superannuation Guarantee from calculating on the salary sacrifice amount, follow these steps:

  1. Go to the Payroll command centre and click Payroll Categories.
  2. Click the Superannuation tab.
  3. Click the zoom arrow next to the Superannuation Guarantee (expense) category applicable to this employee.
  4. Click Exempt.
  5. Select the Base Hourly 10% Wage Category - this will make it exempt from Superannuation Guarantee contributions.
  6. Click OK.

Task 5 - Pay the Employee

You will notice that the new wage categories will show as well as the Base Hourly category. The two new categories will be used instead of the standard Base Hourly one. Zero the hours in Base Hourly (since you cannot deselect Base Hourly for an employee). Allocate the total hours the employee has worked to both new wage categories. This will correctly calculate the total amount of gross wages that is to be paid to the employee and the amount sacrificed will be deducted before PAYG Withholding tax is calculated.

The Superannuation Guarantee will only calculate on the gross amount of wages less the salary sacrifice amount in other words $1,800.00 x 9.5%=$136.80.

  • If any entitlements are currently set to calculate as a percentage of Gross Hours, ensure that the Base Hourly 10% wage category has been exempted using the Exempt button in the Entitlements Information window. If the entitlements are user-entered amounts, or set hours per pay period/month/year, it will not be necessary to amend them.
  • If the employee above takes eight hours of annual leave for the month, the hours would be entered as follows:
    • 8 hours of Holiday Pay
    • 72 hours of Base Hourly 90%
    • 72 hours of Base Hourly 10%

This assumes that the salary sacrifice does not apply to holiday pay amounts paid. If this is required, set up two holiday pay categories as shown above for the base hourly categories.