Advivo Accountants and Business Advisors Brisbane explains the new super guarantee obligations effective from 1 January 2020 and what you need to do…
If you’ve heard the recent ATO announcements, you’ll know the way Superannuation Guarantee Contributions (SGC) are calculated has changed. Effective from 1 January 2020, salary sacrifice amounts can no longer be used to reduce your SGC obligations, regardless of the amount your employee elects to salary sacrifice.
What does this mean for you?
This means the salary sacrificed amount does not count towards your super guarantee obligations. In addition to this change, the super guarantee will be 9.5% of the employee’s ordinary time earnings (OTE) ‘base’. The base sum is the sum of:
- the employee’s OTE
- the amount of salary sacrificed from the employee’s OTE
What do you need to do?
As stated by the ATO website, you need to:
- review your salary sacrifice arrangements to make sure you are:
– using your employee’s OTE base to calculate your SG obligation
– not counting salary sacrificed amounts towards the minimum amount of SG you have to pay
- check that all your systems correctly calculate your SG obligations.
If you are using Xero for your business, Xero will help you process this correctly by flagging employees where SGC has been nominated to be reduced. Xero will highlight the employee name and whether they triggered the validation through salary sacrificed super, and/or a deduction. The alert will remind you how to update these settings to comply with the ATO change.
If you’ve already posted a pay run with a payment date on or after 1 January 2020, you may need to review this to make sure the calculations are correct. An easy way to do this is to revert and repost the pay run or post an unscheduled pay run to make any amendments.
Where can you find more information?
For more information on how to adjust Xero payroll to make sure you are all set up, follow this link: