How do reportable employer super contributions (RESC) work?

These contributions must be reported annually to the ATO, but do not include compulsory super payments like your quarterly SG contributions.

Although RESC are not included in your employee’s assessable income and don’t affect the way you calculate their super contributions, they are of considerable interest to the government.

RESC are used by Services Australia and the ATO when they check your employee’s eligibility for several government benefits and child support. The ATO also uses RESC when calculating the Medicare levy surcharge, senior Australians tax offset (SAPTO), spouse super contributions tax offset, super co-contributions, low income super contributions, Division 293 tax, HELP and Student Financial Supplement repayments.

You are required to report RESC to the ATO if the:

• Super contributions are more than you are required to pay under super law; an industrial agreement; the super fund’s governing rules; or federal, state or territory law, and
• The employee has the capacity to influence the rate or amount of super you contribute for them.

What super contributions are reportable?

In general, the employer super contributions that are reportable include:

• Additional contributions made as part of your employee’s individual salary package
• Additional contributions made under a salary sacrifice arrangement
• Before-tax amounts paid to your employee’s super fund at their direction, such as directing an annual bonus to be paid as a super contribution
• Matching contributions made under an individual agreement.

What super contributions are not reportable?

Super contributions you make for your employees that are generally not reportable include:

• SG contributions
• Super contributions required by collectively negotiated industrial agreements
• Matching contributions made under a collective agreement
• Contributions required by the law or the rules of a super fund
• Compulsory contributions to most defined benefit super funds
• Extra contributions your employee is not able to influence (such as an extra contribution made for administrative simplicity or to meet one of your accepted policies)
• Contributions from your employee’s after-tax income, as these will not affect their assessable income.

If you make additional SG contributions as a result of a collective agreement or industrial award and they are not specifically negotiated or influenced by your employee, the extra contributions are not reportable.

Examples of reportable and non-reportable super contributions

How to report super contributions for your employees

If you make extra super contributions for one of your employees (such as salary sacrifice contributions), you can choose to report these contributions through your normal reporting using the Single Touch Payroll (STP) system or on the employee’s annual payment summary.

By 14 July each year, you must complete an end-of-year STP finalisation detailing all the super and tax information you have reported to the ATO. Under the STP rules, this finalisation means you are exempt from the requirement to provide your employees with annual payment summaries and to lodge a payment summary annual report. (Your employees can now access online the information formerly available on their payment summaries via the ATO using their myGov login.)

If you choose not to report the extra super contribution amounts through STP, you are required to give payment summaries to your employees and submit a payment summary annual report to the ATO.

RESC must be reported for the income year (1 July to 30 June) in which they were accrued, not the financial year in which they were paid. This can be different from the year in which they are received by the super fund.

Recordkeeping for RESC: What to record and how long to keep it

The ATO requires you to keep records of whether or not your employees influenced the super contributions you made on their behalf. To meet this requirement, you will need to keep records of how you calculated:

• Your RESC payments
• The portion of the total employer contribution influenced by your employee
• Your employee’s salary or ordinary time earnings.

You also need to keep records of the relevant salary sacrifice agreements and industrial agreements.

These records must be in English and must be kept for five years after they are prepared, obtained, or after the transactions are completed, whichever occurs last.

What government benefits are affected by reportable employer super contributions?

If you make RESC for an employee, the contributions are not included as part of their assessable income, but they are included in the income tests governing eligibility for several government benefits.

The income tests affected by RESC include the Medicare levy surcharge, dependant and senior Australian tax offsets, super co-contributions, low-income super contributions, Division 293 tax on super contributions, spouse super contributions tax offset and HELP repayments.