Superannuation is as essential for a comfortable retirement life as a sturdy foundation is to a well-built house.
Although thinking about super can often be overshadowed by daily financial worries, it’s important to plan ahead to secure a nest egg that will see you through your golden years.
Part of the superannuation process includes understanding the answer to the question, “What are reportable superannuation contributions?”
The answer is crucial for employees and employers as it influences employees’ taxable income and benefit eligibility and impacts employers’ payroll calculations and legal obligations.
Reportable Superannuation Contributions are contributions to a superannuation fund that must be reported to the Australian Taxation Office (ATO).
There are two types of reportable superannuation contributions:
- Reportable employer super contributions. These contributions are made by an employer to an employee’s superannuation fund above the mandatory Super Guarantee (SG) contribution rate of 11%. They usually consist of salary-sacrifice contributions, bonuses, and other employment payments.
- Reportable personal concessional contributions. These contributions come from an employee’s income before it’s taxed. Once moved to your super fund, these concessional contributions are taxed at a rate of 15%. You may need to pay extra tax if you exceed the concessional contribution cap of $27,500 for the 2023–24 tax year. Your cap might be higher if you didn’t use the total amount of your cap in earlier years, falling under the carry forward of unused concessional contributions clause.
How To Calculate Your Reportable Superannuation Contributions
As an employee, calculating your reportable superannuation contributions can be tricky if you’re unfamiliar with the rules.
But a simple way to do it is to add up the total of the following:
- Any salary sacrificed amount from your employer.
- Any personal concessional contributions that you made during the financial year.
- Any employer contributions made for you above the Super Guarantee rate of 11%.
Once you have calculated your total reportable contributions, you should compare this to the concessional contribution cap of $27,500 for the 2023–24 financial year.
You will not have to pay extra tax on these contributions if your total is below this amount.
What Is Included in Reportable Fringe Benefits?
Reportable Fringe Benefits are non-cash benefits that an employer provides to an employee in addition to their salary or wages.
As an employer, you must report these benefits on your employee’s payment summary (or income statement) for tax and government benefits purposes.
Such reportable fringe benefits can include
- Free or discounted rent for residential accommodation
- Car allowances
- Private health insurance
- Low-interest loans
- Free or discounted travel and entertainment
- Gifts and bonuses
- Additional super payments made above the Super Guarantee rate
What Are the Reportable Employer Super Contributions?
Reportable Employer Super Contributions (RESC) are contributions made to an employee’s superannuation fund beyond the mandatory Superannuation Guarantee (SG) contributions.
These contributions are usually part of an arrangement where your employee chooses to forgo a portion of their salary or as additional voluntary contributions made by you as their employer.
Reportable Employer Contributions
Reportable Employer contributions include
- Salary sacrifice contributions. An employee voluntarily agrees to contribute a portion of their pre-tax salary to their superannuation fund.
- Additional voluntary employer contributions. You contribute more to an employee’s fund than the Superannuation Guarantee mandates.
- Bonuses contributed to super. An employee chooses to contribute a received bonus to their superannuation fund before it’s taxed.
Non-Reportable Employer Contributions
Non-Reportable Employer Contributions include
- Compulsory superannuation guarantee contributions. Superannuation contributions the law requires you to pay for your employees (11% of their ordinary time earnings).
- Non-monetary benefits. Fringe benefits like company cars or health insurance you provide employees.
- Employer contributions under a collective agreement. Contributions made under an industrial agreement that an employee has no influence over.
FAQs About Reportable Superannuation Contributions
Is Superannuation a Reportable Fringe Benefit?
No, superannuation is not considered a reportable fringe benefit.
Superannuation refers to mandatory and voluntary contributions made by employers to an employee’s retirement fund, taxed at concessional rates within the superannuation system.
On the other hand, reportable fringe benefits are non-cash perks provided by employers, such as company cars or private health insurance, which are subject to a separate Fringe Benefits Tax paid by the employer.
What Is the Employer Super Contribution Base?
The employer super contribution base is the total salary and wages paid to an employee during the financial year.
This figure is used to calculate how much an employer must contribute towards their employee’s superannuation fund per the Superannuation Guarantee.
What Is the Superannuation Fund in Australia?
Superannuation funds in Australia are retirement savings accounts that employers must contribute to from their employees’ wages.
This provision allows people to save for retirement over their employed years.
Additionally, super funds invest contributions to grow over time, maximising these retirement savings.
What Is the FBT Rate in Australia?
The Fringe Benefits Tax (FBT) rate in Australia is 47%.
The FBT applies to certain benefits an employer provides, such as company cars, free or discounted travel and entertainment, private health insurance, gifts, and bonuses.
Do You Need Help Calculating Your Contributions?
When calculating how much you need to report for reportable superannuation contributions and what can be excluded, there are many things to consider.
At GeekBooks, we know you’re already under pressure from running your business.
So if you’re feeling overwhelmed and still wondering, “What are reportable superannuation contributions”; take a deep breath.
Professional help is at your fingertips.
Our team of superannuation geeks will take the hassle out of calculating these contributions for you with our Superannuation and Accounting Financial Services.
Complete our online booking form or call 02 9158 3591 for a free quote today.