• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

SuperGuide

Superannuation and retirement planning information

  • SuperGuide Premium
  • Account
  • Log In
  • SuperGuide Premium
  • Account
  • Log In
  • How super works
    • Super for beginners
    • Super rules
    • Employers guide to super
    • Super contributions
    • Super and tax
    • Accessing super
    • Super news
    • Women and super
    • Super tips and strategies
    • How-to guides
    • Super quizzes
    • Superannuation Q&As
    • Superannuation glossary
  • Super funds
    • Best performing super funds
    • Super fund rankings
    • Best performing pension funds
    • Pension fund rankings
    • Super fund average returns
    • Super investing strategies
    • Comparing super funds
    • Choosing a super fund
    • Choosing an investment option
    • Super fund fees
    • Insurance and super
    • Super fund profiles
  • SMSFs
    • SMSFs for beginners
    • SMSF administration
    • SMSF checklists
    • SMSF compliance
    • SMSF investing
    • SMSF pensions
    • SMSF strategies
    • SMSF Q&As
  • Plan your retirement
    • Retirement planning for beginners
    • When should I retire?
    • How long will I live?
    • How much super do I need?
    • Will I get the Age Pension?
    • How much will I spend in retirement?
    • Financial advice
    • Retiring overseas
    • Preparing for retirement
    • Retirement planning strategies
    • Retirement calculators and reckoners
  • In retirement
    • Income in retirement
    • Super lump sums
    • Super pensions
    • Age Pension
    • Working in retirement
    • Life in retirement
    • Senior concessions and services
    • Aged care
    • Estate planning
    • Super death benefits

Home / How super works / Employers guide to super / How do reportable employer super contributions (RESC) work?

How do reportable employer super contributions (RESC) work?

November 13, 2020 by Janine Mace Leave a Comment

Reading time: 3 minutes

On this page

  • Reportable employer super contributions: What are they?
  • What super contributions are reportable?
  • What super contributions are not reportable?
  • Examples of reportable and non-reportable super contributions
  • How to report super contributions for your employees
  • Recordkeeping for RESC: What to record and how long to keep it
  • What government benefits are affected by reportable employer super contributions?

Making super contributions on behalf of your employees can create a lot of paperwork, but there’s an important task you mustn’t forget – notifying the ATO of any reportable employer super contributions (RESC).

If you make super contributions for your employees on top of their normal Superannuation Guarantee (SG) contributions, you need to know the RESC rules.

RESC payments have an impact on your employee’s eligibility for various government benefits and offsets, and it’s up to you to let the ATO know about them.

Reportable employer super contributions: What are they?

RESC are any extra super contributions you make to the super fund of one of your employees above the normal legislated requirements.

These contributions must be reported annually to the ATO and 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.


Advertisement
SuperGuide Premium is ad-free

RESC are used by Services Australia and the ATO when they check your employee’s eligibility under the various income tests for government benefits.

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 or the super fund’s governing rules.
  • Employee has the capacity to influence the amount or way it is contributed.

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.

For more information, read SuperGuide articles:

  • Salary sacrifice and super: How does it work?
  • Your simple guide to Superannuation Guarantee (SG) contributions

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.
  • 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.


Need to know: Capacity to influence

If you enter into an agreement to contribute more super for an employee than you are required, your employee is considered to have capacity to influence the amount of contributions made.

In determining this capacity, the ATO looks at factors such as:

  • Your relationship with the employee.
  • Your employee’s involvement in negotiating the terms of any industrial agreement governing the super contributions.
  • Size of the contributions for your employee relative to the compulsory super contributions you are required to make.
  • Super contribution arrangements in place for other employees.
  • Any non-arm’s length dealings.

The ATO does not consider an employee has the capacity to influence their super contributions just because they vote for a collective agreement or are part of a group negotiating a collective agreement with you.

An employee is considered to have the capacity to influence super contributions in situations where they can directly negotiate (or have an option to directly negotiate) an employer super contribution in excess of the compulsory contributions.


Examples of reportable and non-reportable super contributions


Case study 1: Extra contributions

José is keen to boost his retirement savings and negotiates an individual common law employment contract with his employer when he starts a new job. His employer agrees to pay super contributions into José’s super fund at the rate of 12% of his salary.

José’s employer has no policy regarding the employer contributions it pays for its employees, other than the 9.5% SG contributions required by super law. The company is willing to negotiate higher rates of super contributions if employees request it.

To comply with the rules on RESCs, José’s employer records the extra 2.5% super contributions made for him into his super fund as an RESC on his annual payment summary. The 9.5% SG contributions are not reportable to the ATO.

Source: Adapted from the ATO website


Case study 2: Contributions under industrial agreements without employee influence

Ayumi runs a small business employing ten employees. Under the industrial agreement covering their employment, she must contribute 11% of her employees’ ordinary times earnings (OTE) to a super fund (1.5% more than the normal SG contribution amount).

Ayumi’s employees can vote on the agreement but they have no influence over the amount of super she contributes for them. In this case, Ayumi does not need to report the additional super contributions.

Source: Adapted from the ATO website


Need to know: Defined benefit fund contributions

Super contributions you make to a defined benefit fund for your employees are generally not reportable as the amount you must contribute for defined benefit members is usually decided by the fund’s actuary, not your employee.

If your employee can choose to make extra contributions to their account from their before-tax income, however, these extra amounts are reportable. The same applies to any extra super contributions made to an accumulation account in the defined benefit fund (or any other super fund), as the employee influences these 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.

Compare super funds

Read more...

Advertisement

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.)

For more information, read SuperGuide articles:

  • What is myGov and how do I use it?
  • 10 ways myGov can help you master your super

If you choose not to report the extra super contribution amounts through STP, you are still 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 to the year in which they are received by the super fund.


Need to know

Super contributions to a complying super fund – whether or not they are RESC – are not fringe benefits and should not be included on your employee’s income statement or payment summary as reportable fringe benefit amounts.

If you make RESC to an employee, you must provide them with a payment summary even if you have not paid them salary or wages.


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 kept for five years after they are prepared (or after the transactions are completed) and they must be in English.

Advertisement

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, deductions for personal super contributions, low income super contributions, Division 293 tax on super contributions, spouse super contributions tax offset and HELP repayments.

For more information, read SuperGuide articles:

  • How the Division 293 tax works: Super surcharge for high earners
  • How does SAPTO work? (Senior Australians and Pensioners Tax Offset)
  • How a government co-contribution can help boost your super savings
  • How LISTO works (Low Income Superannuation Tax Offset)
  • How do tax-deductible superannuation contributions work?
  • Medicare levy surcharge
Boost your retirement with a SuperGuide Premium subscription

SuperGuide Premium is your independent expert on superannuation and retirement planning. Learn how much super you could need, what are the best performing super and pension funds, how to run an SMSF, the latest super rates and thresholds, contributions guides, and super rules and strategies.

Includes performance rankings for 235 super funds and 166 pension funds, more than 600 articles, how-to guides, checklists, tips, calculators, case studies, quizzes and a monthly newsletter.

Find out more


Learn more about employer super responsibilities in the following SuperGuide articles:

Quiz: Employer super responsibilities

December 1, 2020

Employee or contractor for super purposes? How to tell the difference

November 13, 2020

How to create an effective salary sacrifice arrangement with your employees

November 13, 2020

Employee super contributions for the self-employed and micro businesses

November 13, 2020

Checklist for employers: 7 tips to help you master your super responsibilities

November 13, 2020

Employer’s guide to Superannuation Guarantee (SG) contributions: Which employees are eligible?

November 13, 2020

Choosing a default fund for your employees

November 13, 2020

Calculating your employees’ SG contributions? The rules to help get it right

November 13, 2020

Related topics

Employers guide to super How super works

IMPORTANT: All information on SuperGuide is general in nature only and does not take into account your personal objectives, financial situation or needs. You should consider whether any information on SuperGuide is appropriate to you before acting on it. If SuperGuide refers to a financial product you should obtain the relevant product disclosure statement (PDS) or seek personal financial advice before making any investment decisions. Comments provided by readers that may include information relating to tax, superannuation or other rules cannot be relied upon as advice. SuperGuide does not verify the information provided within comments from readers. Learn more

© Copyright SuperGuide 2009-21. Copyright for this article belongs to SuperGuide Pty Ltd, and cannot be reproduced without express and specific consent. Learn more

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

How super works
Super for beginners
Super rules
Employers guide to super
Super contributions
Super and tax
Accessing super
Super news
Women and super
Super tips and strategies
How-to guides
Super quizzes
Superannuation Q&As
Superannuation glossary
Super funds
Best performing super funds
Super fund rankings
Best performing pension funds
Pension fund rankings
Super fund average returns
Super investing strategies
Comparing super funds
Choosing a super fund
Choosing an investment option
Super fund fees
Insurance and super
Super fund profiles
SMSFs
SMSFs for beginners
SMSF administration
SMSF checklists
SMSF compliance
SMSF investing
SMSF pensions
SMSF strategies
SMSF Q&As
Plan your retirement
Retirement planning for beginners
When should I retire?
How long will I live?
How much super do I need?
Will I get the Age Pension?
How much will I spend in retirement?
Financial advice
Retiring overseas
Preparing for retirement
Retirement planning strategies
Retirement calculators and reckoners
In retirement
Income in retirement
Super lump sums
Super pensions
Age Pension
Working in retirement
Life in retirement
Senior concessions and services
Aged care
Estate planning
Super death benefits
Advertisement
Compare super funds

Footer

Important: Disclaimer

All information on SuperGuide is general in nature only and does not take into account your personal objectives, financial situation or needs.

You should consider whether any information on SuperGuide is appropriate to you before acting on it.

If SuperGuide refers to a financial product you should obtain the relevant product disclosure statement (PDS) or seek personal financial advice before making any investment decisions.

Learn more

About SuperGuide

SuperGuide is Australia’s leading superannuation and retirement planning website. Learn more

Superguide Pty Ltd ATF Superguide Unit Trust as a Corporate Authorised Representative (CAR) is a Corporate Authorised Representative of Independent Financial Advisers Australia, AFSL 464629

  • Contact us
  • Advertise on SuperGuide
  • Careers

Before using this website

  • New to SuperGuide?
  • Terms and Conditions of Use
  • Financial Services Guide
  • Privacy Policy and Privacy Collection
  • Copyright Policy
  • Editorial Policy and Complaints
  • Disclaimer

  • SuperGuide Premium
  • Subscriber feedback
  • Sitemap