Private ruling: Reportable employer superannuation contributions
Published: October 2013
Ruling period: 2012-13 income year
Date scheme commenced: 1 July 2012

Ruling: Q1: Is the amount that is shown on your PAYG payment summary as a reportable employer superannuation contribution to be treated as a reportable employer superannuation contribution? | A1: Yes.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You joined your employer some years ago. At that time, personal contributions to their superannuation fund was a before tax mandatory percentage of salary. The default superannuation plan was a Defined Benefits fund. A couple of years ago, this nominated percentage became discretionary in that the contribution could be reduced. However, if the contribution is reduced below two-thirds of the nominated percentage (before tax), the contributor's defined benefit will be retrospectively reduced. That is to say, that the employer contributes double the nominated percentage and employee two-thirds of the nominated percentage; if the employee contribution is ceased, the defined benefit contribution for all years of service will be reduced by 25%. Your personal defined benefit is worth a reasonable amount, so if you cease paying this level of employee contribution even for a month, you will lose one-quarter of this amount. It does not matter if you start to pay the contribution again as the calculation is based on the lowest contribution. Your employer insists the payment is discretionary and reports the contribution on your PAYG Summary. You have checked with the ATO and the superannuation fund and been advised that the two-thirds of the nominated percentage is not discretionary as it cannot reasonably be reduced. However, it is still reported on your PAYG Summary. Your employer completed your PAYG Summary for the 2012-13 income year showing your reportable employer superannuation contributions to be an amount consisting solely of your total pre-tax contributions. This is your only superannuation contribution. (You are not making any after tax contributions.) The information you hold indicates that the total amount contributed to the superannuation fund by your employer for the 2012-13 income year was some three times the amount recorded as a reportable employer superannuation contribution.

Relevant legislative provisions: Taxation Administration Act 1953 Section 16-182 of Schedule 1.

Reasons for decision: Summary: The amount that is shown on your PAYG payment summary as a reportable employer superannuation contribution is to be treated as a reportable employer superannuation contribution. | Detailed Reasoning - Reportable employer superannuation contribution - the law: A 'reportable employer superannuation contribution' for an individual for an income year, is an amount that has been, is, or will be contributed in respect of the income year: · by an employer of the individual, or an associate of the employer, for the individual's benefit · to a superannuation fund or an RSA to the extent that either or both of the following paragraphs apply: · the individual has or has had, or might reasonably be expected to have or have had, the capacity to influence the size of the amount · the individual has or has had, or might reasonably be expected to have or have had, the capacity to influence the way the amount was, is or will be contributed so that his or her assessable income is reduced. | Detailed Reasoning - Salary sacrificed superannuation: A salary sacrifice arrangement is a contractual agreement where you agree with your employer to forego part of your future salary or wages in return for providing benefits of a similar value. You cannot enter into a salary sacrifice arrangement for salary or wages you have already earned. Under a salary sacrifice arrangement, you negotiate with your employer for them to make extra superannuation contributions for your benefit from your pre-tax income. These extra contributions are reportable employer superannuation contributions. | Detailed Reasoning - Your situation: Your employer makes employer superannuation contributions on your behalf to the superannuation fund. Those superannuation contributions include your member contributions as a salary sacrifice (being contributions from your pre-tax income rather than your after tax income). The salary sacrifice component of your employer's superannuation contributions is a reportable employer superannuation contribution because: · this component is your member contribution to the superannuation fund · you can choose to make this contribution from either your pre-tax income (as a salary sacrifice) or from your post-tax income · you have chosen to make your member contribution from your pre-tax income · making the contribution from your pre-tax income reduces your assessable income. Note: it is the manner of the contribution (from pre-tax income instead of after tax) that is important in reaching this conclusion, not the amount of the contribution.