Employers need to pay further contributions on salary sacrificing amounts from 1 January 2020

This new superannuation contribution obligation will start from 1 January 2020.

The employer is required to pay further  9.5% superannuation contributions on the salary sacrificing amounts.

For example, employee’s salary package includes:

$100,000 salary + $9,500 employer contributions + $15,500 salary sacrificing contributions =  $125,000

Based on the new rules, from 1 January 2020, the above salary package will become the following:

$100,000 salary + $9,500 employer contributions + $15,500 salary sacrificing contributions + 9.5%*$15,500=  $126,472.50

Employee’s total concessional contribution: $15,500 + $9,500 + $ $1,472.50 = $26,475.50

This amount $26,472.50 has exceeded the current concessional contribution cap $25,000 and the excess will be subject to excess contribution tax.