Revealed: Bosses' $1.5b salary sacrifice windfall

https://www.google.com/search?client=firefox-b-d&q=Revealed:+Bosses'+$1.5b+salary+sacrifice+windfall

Under existing laws, any amount salary sacrificed into super by an employee counts towards their employer’s obligation to pay 9.5 per cent of gross wages into super.

For example, the super contributions of somebody earning $100,000 must reach $9500 a year. If the employee voluntarily pays $9500 into super via salary sacrifice arrangements, the obligation is considered to be fulfilled and the employer gets away with paying nothing.

"No one would undertake such a strategy if they knew that their hard-earned dollars were been used to offset their employers super guarantee obligations,” Mr Greco said.

"The explanatory memorandum to the bill does not explain why the measure has a delayed start date presumably allowing those who use the loophole to adjust their business practices."

Another problem arises in that salary sacrifice arrangements involve an employee making payments out of their pre-tax earnings.

By doing this they reduce the salary upon which the 9.5 per cent SG is calculated. Let’s say the person on $100,000 opts to salary sacrifice $2000 into super.

Their employers’ obligation drops from owing 9.5 per cent of $100,000 to 9.5 per cent of $98,000.

 

A widespread issue that I first realized 5 years ago thanks to www.superguide.com.au

Glad to see that this is finally being addressed.

 

@JohnPropChat - So, is the gummint proposing to change the way this works?

If I'm on a TRP of $109,500 (not uncommon), employer uses this methodology regardless.

 

Bill in the lower house.

 

This has always been the case.

There have been many columns written by financial experts pointing this out, and advising anyone contemplating salary sacrifice to check the employer’s position before acting.

For hubby (private enterprise) and me (govt), both employers paid the full super contribution regardless of salary sacrifice.

 

is there a bill? got a link. work around to this has been to put money in after tax and claim back via super fund but this is only a recent thing. this should have been closed years ago :/

 

I have also seen some employers pay a base 9.5% regardless of total earnings. So high income earner on $300K gets $28,500 super and it stuffs their caps and leads to excess contributions and even worse problems. If they arent ware and make additional contributions to non-concessional it can blow that cap too. Throw in poor timing of when contributions are paid and they find 5 quarters of super in a year and its a mess. Important high earners manage their contributions closely.

Employers are permitted to cease at one of these other two levels to limit super:
1. Quarterly earning cap of $55,270 per quarter (meaning max $5,250.65 x 4 = $21,002.60 pa) OR
2. $25,000 pa
Depend on the employer. By law 1. applies but some employers adopt the more generous view in 2. Depends how remuneration package is structured too.

I have seen employees with a package that isnt specific who think their super is 9.5% to learns its less...Maybe 5%

The other super rip off is the masterchef style theft of unpaid employee entitlements. Should become a criminal offence akin to using a knife to steal.

 

Given that a lot of contracts now include super as part of the package and it is written out in a clear total amount, how can employers get away with violating an employment contract?

 

probably line about total package size.

 

Its not a violation in the technical reading of the SGC Act. Its exploitative.

A decision yesterday shows how employers do this carp. Cadbury (Mondalez) employs shift workers on 12 hr shifts. Cadbury tried to argue that they should only be liable for sick leave of a standard day (7.6hrs) and not the shift of 12hrs. Dismissed. They stood to make millions from denying their lowest paid workers full pay...That the role of lawyers and HR managers. To save the company $$$. And those workers would have been impacted with less super on their sick days too.

Now Cadbury will an even make a smaller size block ? Arseh2les

 

one person's exploitative is another person's playing by the rules.
for the record I do think it is exploitative.

 

Its one of the nasty sides of law. What is legal may not be moral or ethical or just decent

 

I checked mine some time ago and my employer pays their percentage and my salary sacrifice is added on top of that, you wouldn't be happy if that wasn't the case

 

No they will simply move production to Asia or USA or automate.
Australia is a very expensive place to do almost anything

 

Interesting... when I was doing shift work (2000-2003), we were a severe minority of the companies work force - there were 12 of us on shift where I was working, I actually dont think there were many shifties apart from that, and a couple thousand employees total across Australia. When they brought in the enterprise agreement, the shift workers vote counted for nought. Our holidays, sick leave, etc were all calculated on a 7.6hr day, so it did indeed stuff up pay, super, etc. I mean, we were paid well above minimum wage, so it wasn't exactly an issue, but we got steam rolled by the rest of of the company. The also brought in a "birthday leave" day, and wiped out a bunch of weekend/night loading - so again, the mass of 9-5ers voted, and us poor shift workers got shafted...

Cheers,
Inertia

 

But very stable and attractive place to do business. I’d be keen for an example of business moving to USA when they didn’t already have a footprint there based on cost.