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You can set up salary sacrifice payments for employees who want to make additional superannuation contributions each pay. These payments are deducted from the employee's gross pay and will be on top of the compulsory superannuation contributions you make on their behalf.
The amount being sacrificed each pay will be either:
- a fixed % of the employee's pay, or
- a fixed $ amount.
Need more info? The ATO website has some great info on the ins-and-outs of salary sacrificing super.
Below are the steps for setting up a salary sacrifice superannuation. If you need to set up employee additional or employer additional super contributions, see Additional superannuation contributions.
To set up a salary sacrifice payroll category
- Go to the Payroll command centre and click Payroll Categories.
- Click the Superannuation tab.
Click the zoom arrow to open the Salary Sacrifice category. If this category doesn't exist, click New to create it.
You can include additional information in the category name to make it easier to identify, for example Salary Sacrifice 10% - Alan Long.
Select the applicable Linked Payable Account.
If you're using Single Touch Payroll reporting, you also need to choose the ATO Reporting Category. For more information, see Assign ATO reporting categories for Single Touch Payroll reporting.
- If you're creating a new superannuation category, ensure the Contribution Type is set to Salary Sacrifice (deduction). This will ensure the deduction is made from pre-taxed earnings.
Set the Calculation Basis.
If the salary sacrifice is for do this a fixed %
Select the first Equals option and specify the Percentage of Gross Wages to be sacrificed.
Example (click to enlarge):
If you need to salary sacrifice different percentages for different employees, you'll need to create a separate salary sacrifice superannuation category for each employee.
a fixed $ amount
Select the second Equals option and specify the Dollars per Pay Period to be sacrificed.
Example (click to enlarge):
Click Employee and select the employee who's sacrificing these payments.
Exempting wage categories (fixed % only)
If you're setting up a fixed % salary sacrifice and there are wage categories you want to exempt from the salary sacrifice calculation, for example overtime, click Exempt and select these categories. Check with your accounting advisor or the ATO for clarification.
- Click OK to save the salary sacrifice category.
To prevent Superannuation Guarantee from calculating on the sacrificed amount
The ATO advises that the amount an employee salary sacrifices will reduce their superannuation guarantee by the salary sacrificed portion unless agreed otherwise with their employer. To set this up you'll need to create a new superannuation category for each employee that salary sacrifices and use the Exclusions field.
Let's step you through it using this example: Mary Jones' employer wants to reduce the superannuation guarantee calculation on the $400 that is salary sacrificed each month.
- Go to Payroll > Payroll Categories > Superannuation tab> New.
- In the Superannuation Name field, type 'Super Guarantee Excl. Sal Sac' or similar. You may also want to incorporate the employee's name.
At the Linked Expense Account and Linked Payable Account fields, select your applicable superannuation accounts. Check with your accounting advisor if unsure.
- For the Contribution Type select Superannuation Guarantee (expense).
- Set the Calculation Basis to 'Equals 9.50% Percent of Gross Wages'.
- Type $400 in the field for 'Exclusions: Exclude the first $x.xx of eligible wages from calculations'. If the salary sacrifice is based on a fixed percentage, you'll need to calculate what the dollar value of the scarified amount and enter this here.
- 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.
- 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 appear similar to the example shown below.
- Click Employee and select the relevant employee that you want to apply the Superannuation Guarantee category to. Any employees that are selected here should be deselected from any other Superannuation Guarantee expense type that no longer applies such as the standard Super Guarantee expense of 9.5% of Gross Wages.
- Click OK to return to the Superannuation Information window.
- If required, click Exempt and select any wage categories that you do not want superannuation to be calculated on.
- Click OK to return to the Superannuation Information window, then click OK again.
The Superannuation Guarantee will now only calculate on the Base Salary net of salary sacrifice superannuation.
Salary sacrifice superannuation FAQs
What if I have employees who want to salary sacrifice different fixed amounts?
Alan wants to salary sacrifice $200, but Steven wants to sacrifice $150.
Here's how to do it:
- Set up the salary sacrifice superannuation category with the Calculation Basis set to User - Entered Amount per Pay Period.
- Open the employee's card and click the Payroll Details tab.
- Click Standard Pay and specify the amount of super to be deducted for this employee next to the Salary Sacrifice category. Remember to enter this as a negative value. Here's an example:
- Click OK.
- Repeat steps 2 - 4 for each employee who wants to salary sacrifice a different amount.
How do I handle salary sacrifice on payment summaries?
The ATO require salary sacrifice payments to be excluded from Gross Payments. Because salary sacrifice payments in AccountRight are negative values, selecting them against Gross Payments in the payment summary process reduces the Gross Payments by the sacrificed amounts. This excludes them from being reported as part of Gross Payments (thus keeping the ATO happy).
Salary sacrifice superannuation payments are typically considered Reportable Employer Superannuation Contributions, so they are also usually accounted for as such on payment summaries.
For your specific circumstances, you should always seek clarification from the ATO or your accountant about how to handle salary sacrifice payments on your payment summaries.
Can I pay an employee's super into more than one fund?
Yes, you can pay an employee's super into multiple funds.
Why is my salary sacrifice calculating incorrectly?
If you have set up Salary Sacrifice to use a fixed percentage, the calculation will look at the total pay for the month and work out the amount to sacrifice. So, if your salary sacrifice is set up mid-month there may be previous pay amounts used in the calculation.
In these cases, manually enter the correct salary sacrifice amount when recording your pays. The following month the calculation will correct.
How do I delete a super salary sacrifice payroll category?
You can only delete a superannuation category if it hasn't been used in an employee's pay.
Go to the Lists menu and choose Payroll Categories.
Click the Superannuation tab.
Click the zoom arrow to open the superannuation category to be deleted. The Superannuation Information window for that category appears.
Go to the Edit menu and choose Delete Superannuation.