SGC law specifically says that an employer is only obliged to pay 9.5% on Ordinary Time Earnings (OTE), as opposed to 9.5% on gross / pre salary sacrifice earnings, unless there is a "law" eg. industrial agreement/EBA in place that specifically says SGC is payable on salary sacrificed to super amounts.
What does this mean?
It means that if you are paying 9.5% SGC on gross earnings and there is no industrial or workplace agreement/EBA in place that says SGC is payable on the salary sacrificed amounts, the 9.5% SGC that's paid on the salary sacrificed amount (between gross and OTE) is deemed to be an employer contribution (RESC) and should be reported on the payment summary along with the salary sacrificed super amounts.
To correctly calculate 9.5% SGC on OTE only you need to make sure that the Impact on SGC Calculations field on the Deduction Category settings is set to "Reduces ordinary time earnings (OTE)"...
To get to the deduction settings go to the payroll settings tab and select Deduction Categories from the list under the pay run settings heading, then click on the deduction category name to expand the settings
If you are operating under an industrial agreement or EBA that dictates that 9.5% SGC should be paid on salary sacrificed to super you will need to set the Impact on SGC Calculations field on the Salary Sacrifice to Super deduction category to No impact...
If there is no (collective ie. the individual employee doesn't have any influence) agreement in place you should choose one of the other options. Contact the ATO if you need further clarification on which option to select or any aspect of this issue.
If you do not have an industrial or workplace agreement/EBA in place that specifies SGC is payable on salary sacrificed amounts and have been incorrectly paying 9.5% SGC on the salary sacrificed to super amounts (between gross and OTE) these amounts will need to be changed from SGC to employer contribution amounts, so they can be correctly reported on the payment summary along with the salary sacrificed super amounts, as RESC.
First work out the $ amount that needs to be adjusted -
- go to the Reports tab
- select the Deductions Report
- filter it for the financial year (or applicable period)
- select the Salary Sacrifice to Super deduction category
- hit Run
The amount that needs to be converted from SGC to Employer Contribution will be 9.5% of the total of salary sacrificed to super (per employee).
To convert SGC to Employer Contributions follow these steps in your pay run:
- click on the affected employee's name to expand the pay run record
- click on the Actions button within
- select the Adjust Super option
- choose SGC as the contribution type and enter a negative figure equal to the amount you need to adjust, hit Save
- select the Adjust Super option again
- choose Employer Contribution as the contribution type and enter a positive figure equal to the amount you need to adjust, hit Save