How is the Employer Superannuation Contribution calculated for an office holder who is a member of an accumulation scheme such as the PSSAP?
For members of accumulation schemes the Employer Superannuation Contribution is the amount of compulsory superannuation contribution that must be paid to the relevant fund. Additional salary sacrifice contributions are not included in the definition of the Employer Superannuation Contribution.
PSSAP members - who are holders of part-time offices
The superannuation salary for holders of part-time offices who are members of the PSSAP is the office holder’s fortnightly contribution salary (FCS). Note that holders of full-time office who are working part-time are subject to the same rules as other holders of full-time offices.
PSSAP members - other than holders of part-time offices
The PSSAP requires the Employer Superannuation Contribution to be calculated at the rate of 15.4% of salary for superannuation purposes.
The Tribunal’s determinations provide that the salary for superannuation purposes for a PSSAP member will be the person’s Ordinary Time Earnings (OTE).
Members of other schemes
The Employer Superannuation Contribution will be the compulsory (i.e. minimum) amount required to meet the employer’s obligations under the Superannuation Guarantee (Administration) Act 1992 (Super Guarantee Act), i.e. 10% of OTE.
OTE is essentially the earnings that can be attributed to ‘ordinary hours of work’ so that the minimum Employer Superannuation Contribution can be calculated. Under the Superannuation Guarantee (Administration) Act 1992 (the Super Guarantee Act) remuneration as an office holder is considered ‘salary or wages’ for this purpose.
ATO Superannuation Guarantee Ruling 2009/02 provides information about payments that are excluded from the definition of salary and wages (such as fringe benefits)
For an office holder remunerated on a total remuneration basis, the salary for superannuation purposes on which the Employer Superannuation Contribution is calculated is the taxable amount being received by the office holder.
However, OTE does not require a superannuation contribution to be made on all earnings related to the ordinary hours of work – there is an upper earnings limit for each quarter in the financial year. Earnings above this limit are not considered to form part of OTE. The limit is the ATO’s ‘maximum contribution base’ which is varied each financial year. Employers are not required to provide superannuation support for earnings above the maximum contribution base.
Read more about OTE and the maximum contribution base on the ATO website
The Employer Superannuation Contribution for PSSAP members is therefore 15.4% of OTE or 15.4% of the maximum contribution base (whichever is lower). The Employer Superannuation Contribution for members of other schemes is therefore 10% of OTE or 10% of the maximum contribution base (whichever is lower).
Where the office holder is also salary sacrificing to the PSSAP or another fund the usual salary sacrifice requirements apply.