Keypoints

Under changes to tax law effective from 1 July 2009, employers must include reportable employer superannuation contributions (RESCs) on payment summaries (formerly group certificates). Payment summaries for the 2010 financial year and beyond will include a label to show RESCs.
Individuals must include RESCs on tax returns. RESCs will be included in income tests for some welfare payments, tax benefits, and tax obligations.
According to the Australian Taxation Office, RESCs are employer contributions made on behalf of an employee under a salary sacrifice arrangement that are additional to other employer contributions which the employee has not influenced or are additional to the minimum contributions required by:

• Superannuation Guarantee law
• a Commonwealth, state or territory law
• an industrial agreement, or
• the trust deed or governing rules of a super fund

Post tax employee contributions to defined benefit schemes are not RESCs. However, where an employee chooses to salary sacrifice their contributions to a defined benefit scheme the contributions are RESCs.

Employers

Agencies should:

• check with their payroll administrator that their system will comply with Commonwealth tax law and may also need to discuss compliance issues with their payroll software provider
• issue a payment summary where a RESC is made even if the employee has not been paid a salary or wage
• bring this Circular to the attention of employees
• not provide financial advice.

For further information see: http://www.ato.gov.au/businesses/content.asp?doc=/content/00189411.htm andhttp://www.ato.gov.au/businesses/content.asp?doc=/content/00189411.htm&page=1&H1
Agencies may subscribe to ATO email updates at http://www.ato.gov.au/subscription/

Employees

Employees may wish to review their pay as you go (PAYG) withholding arrangements to ensure the tax withheld from salary or wages is sufficient to meet any changed liability.
An individual’s reportable superannuation contributions will consist of:

• RESC, plus
• personal deductible contributions (any personal contribution made to a super fund for which an income tax deduction is made).

The introduction of reportable superannuation contributions does not alter an employee’s assessable or taxable income. However, it may affect an employee’s tax liability if they lose eligibility for a tax offset. 
The Australian Tax Office has advised that from 1 July 2009 income tests for the following tax benefits and obligations will include reportable superannuation contributions:

• Medicare levy surcharge threshold calculation
• Medicare levy surcharge (lump sum payment in arrears) tax offset
• Dependency tax offsets
• Senior Australians tax offset
• Pensioner tax offset
• Mature age worker tax offset
• Spouse superannuation contributions tax offset
• Government super co-contribution
• Deduction for personal superannuation contributions
• Higher Education Loan Programme and Student Financial Supplement Scheme repayments.

The changed income tests will also affect a range of Centrelink, Family Assistance Office and Child Support Payments. 
This list is subject to change and it is not intended that ongoing updates will be issued by Circular. 
Employees who wish to make changes to their salary sacrifice arrangements should contact their employer’s payroll provider. Employers and payroll providers are not permitted to provide financial advice. Employees may obtain independent financial advice.
Further information for employees can be found at: http://www.ato.gov.au/individuals/content.asp?doc=/content/00189189.htm

John Lee
Director General