An important change to salary-sacrificed superannuation contributions comes into effect for Australia from 1 January 2020.
Currently, employers can use salary sacrificed super contributions to reduce the amount of super guarantee (SG) they are required to pay. From January, employers can no longer use salary-sacrificed super contributions to reduce their SG obligation. The SG contribution must instead be calculated on 9.5% of the employee’s ordinary time earnings (OTE) base, which is the sum of the employee’s ordinary time earnings and any sacrificed OTE amounts.
To get ready for this change you should review your payroll setups to ensure you are using the employee's OTE base to calculate your SG obligation and you are not counting salary sacrificed amounts towards the minimum amount of SG you have to pay.
For information on how to check and update your pay elements to ensure you are correctly calculating your Super Guarantee obligation, see Ensuring correct Ordinary Time Earnings (OTE) pay elements.
For more information, visit the ATO website or talk to your professional adviser.
The Department of Human Services (DHS) Protected Earnings Amount (PEA) is the part of an employee's or contractor’s pay exempt from child support deductions. The rates are adjusted annually to allow for increases in the cost of living and the new rates take effect for pay dates from 1 January. You can find details of current rates on the Department of Human Services website.
PEA rates for 2020
The following rates apply from 1 January 2020:
Weekly rate $378.53
Fortnightly $757.06 (weekly rate x 2)
Four week period $1,514.12 (weekly rate x 4)
Monthly period $1,645.93 (daily rate x 30.4375)