Salary Sacrifice Changes to Super

If you salary sacrifice into super, you may be about to get a free boost.

Under current super rules, when you opt to salary sacrifice part of your salary to super, employers are able to reduce the amount of superannuation they contribute towards the super guarantee of 9.5%.

Employers are only required by law to ‘top up’ your contributions to 9.5% after your salary sacrifice is taken into account. In addition, the general interpretation is that the super guarantee percentage of 9.5 is applied to your income less your salary sacrifice.

This interpretation unintentionally allowed the reduction of super guarantee required to be paid by employers.

Under changes to super rules, which will be effective as of January 1, 2020, employers will be required to pay the full 9.5% super guarantee on your total gross salary. You can see the effects of these changes in the below table.

Image by Mohamed Hassan from Pixabay

Changes to superannuation contributions under the new rules

As you can see, the point of sacrificing to super is to
a) reduce taxable income
b) to increase your superannuation balance.

​The new changes will allow your sacrificed income to achieve what is actually intended to be achieved.
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Employers will be required to update their systems to comply with this new law from January 1.

​NB: In our experience, most employers have complied with the spirit of the law as opposed to the letter of the law, so you may find your employer has already been using the new rules.
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