What are reportable superannuation contributions?
Have you heard of superannuation contributions? They’re a way to save money for your retirement. It’s important to know how to put money into a retirement fund so you can have a good financial future. Reportable superannuation contributions are a type of contribution that can be useful for your retirement. Can you explain what these contributions mean?
This guide will help you understand why this topic is important. It will give you the information you need to make smart investment choices in the future.
What is a reportable superannuation contribution?
Reportable Superannuation contributions are extra money that an employer pays for their employee’s retirement savings. This money is more than the minimum amount required by the government, which is currently 10.5%. The government plans to increase this minimum amount to 12% by July 1, 2025.
Salary sacrifice means that you choose to put some of your money from your salary into your superannuation fund, and this is something that needs to be reported. But another way to make a reportable contribution is by asking your employer to put your next pay raise directly into your superannuation fund.
Reporting your superannuation contributions is really important because it helps figure out if you qualify for different limits, tax benefits, deductions, charges, and government payments or benefits from Centrelink.
Components of reportable superannuation contribution?
Superannuation contributions that need to be reported include discretionary or concessional contributions, also known as before-tax contributions. These contributions can be divided into two parts:
- Reportable employer superannuation contributions, and
- Reportable personal deductible superannuation contributions
Reportable employer superannuation contributions
Reportable employer superannuation contributions are the payments your employer puts into your super account for you. It doesn’t include the amount they have to pay by law, which is called the Superannuation Guarantee.
If your boss puts money into your super account after taking out taxes, it won’t count as a special kind of contribution that they have to report.
Reportable employer super contributions include those made through salary sacrifice, those made above the required SG contribution amount as part of your compensation plan, and those made in the form of bonuses and lump-sum payments that are sent directly into your super fund.
Example 1: During the 2016-17 year, Olivia earned a total salary of $40,000. Her boss had to put $3,800 (which is 9.5% of her salary) into her retirement fund as the law requires. Olivia also decided to set aside $10,000 from her earnings for her retirement savings account.
The $3,800 is legally required to be paid and does not need to be declared on Centrelink in regards to financial assistance. As such, it should remain unreported.
Olivia’s employer made an additional $10,000 contribution with their approval. This contribution will be considered as reportable superannuation and will be added to Olivia’s Assessable Total Income (ATI) when determining her eligibility for financial assistance. Although her taxable income is recorded as $30,000, the ATI that will be used to decide the amount of financial assistance for Olivia is $40,000.
Please refer to the table provided below to determine which of your employer’s super contributions are reportable and non-reportable:
| Type of Super Contributions | Is this a reportable employer super contribution |
|---|---|
| Mandatory 10.5% employer Superannuation Guarantee (SG) contributions | No |
| Employer super contributions above mandatory SG contributions | Yes |
| Salary sacrifice contributions | Yes |
| Individual salary package with extra supe | Yes - but only the extra super |
| Bonuses/Lump Sums, other payment directed to super (concessional) | Yes |
| Contributions from an employee’s after-tax (non-concessional income) | No |
Reportable personal concessional contributions
A reportable personal concessional contribution is the maximum amount an individual can contribute to their superannuation fund and claim a tax deduction. This applies to both employees and self-employed individuals and is reported on their yearly tax returns.
For example, if you put $10,000 into your superannuation account from your bank and then use the same amount to claim a tax deduction, it will count as a reportable superannuation contribution.
To learn more about reportable super contributions, be sure to check out the Australian Taxation Office (ATO) website.
Are reportable super contributions taxable?
If you put money into your super fund and it’s a reportable contribution, it’s called a concessional contribution. Basically, it means that the amount you want to contribute will have a tax of 15% applied to it, similar to other payments you make to your super fund.
If your income falls in the high-income bracket, you’ll need to pay an extra tax of 15% known as Division 293 tax on any superannuation contributions that need to be reported.
Reportable super contributions are exempt from individual income tax assessment.
Are reportable employer superannuation contributions assessable income?
Absolutely not! Reportable employer superannuation contributions are not taxable income for employees, but they must still be declared in their tax returns. Fortunately, standard Super Guarantee payments do not need to be separately listed on the tax return.
Spouse Reportable Superannuation Contributions
To determine eligibility for specific family benefits and concessions, both you and your partner’s incomes including any reportable superannuation contributions will be considered. When completing the application paperwork, it’s essential to disclose your own reportable super contributions and your partner’s as well.
How to disclose reportable super contributions?
During tax season, if your employer makes any reportable superannuation contributions, they will include it on your payment summary. You must also report this amount on your tax return, but you won’t be taxed on it. If you have made personal concessional contributions that need to be reported, you must include those on your tax return as well.
Why does reportable superannuation contributions matter?
If you enjoy searching for loopholes to evade rules, you should know that different thresholds, including taxes, fees, and Centrelink payments, rely on your taxable income.
If you are thinking about increasing your super contributions to get more benefits, you need to consider reportable employer contributions. These contributions must be disclosed before making any additional contributions to prevent tax reduction. Remember to follow the rules and avoid breaking them.
Various forms of assessments that take into account the disclosure of reportable super contributions include, but are not restricted to:
- Government benefits such as family tax benefits, child care subsidies, child support, parental leave, health care cards;
- Super benefits, including spouse contribution tax offset, co-contribution and low-income super tax offset as well as Div 293 taxation;
- Other offsets and levies, such as seniors and pensioners tax offset, Medicare Levy Surcharge and private health rebate.
When it comes to reportable superannuation contributions, there are a few important things to think about. Whether you’re putting in money yourself or doing it as an employer, you can gain some benefits by choosing a reportable superannuation contributions. These benefits include being able to get tax deductions for the money you contribute and having more flexibility in how you contribute.
Ultimately, the decision to make a reportable super contribution is up to you and should be informed by your own personal circumstances. If you believe it’s the best decision for you and your loved ones, we suggest you do more research or seek advice from a financial consultant.
If you need help with making a reportable super contribution, feel free to contact us at Wealth Factory. We are always available to answer your questions and provide guidance.
