What are Reportable Employer Superannuation Contributions?
Reportable Employer Superannuation Contributions (RESC) include contributions made by an employer that exceed mandated levels and which the employee can influence. RESC generally includes salary sacrifice superannuation and other voluntary employer contributions.
However, contributions to superannuation that are required by an industrial instrument or rules of a superannuation fund are excluded from the RESC definition to the extent that the member has no capacity to influence the requirement to make the contribution or the size of the contribution.
What relevance does RESC play?
RESC is included in the income test for certain government benefits, concessions and obligations, including:
- Spouse contribution tax offset
- Government co-contribution
- Low income superannuation contribution tax offset
- Medicare Levy Surcharge1
- Seniors and pensioners tax offset1
- Family tax benefits1
- Child care benefit1
- Child support1
- Higher Education Loan Program (HELP) repayments1
For more information in relation to the income tests for these benefits, concessions and obligations please refer to Macquarie's Big Black Book.
Notification of RESC
Employers are required to notify both their employees and the ATO of the RESC payments made during a financial year.
Employees are notified of the amount of RESC via the annual PAYG payment summary which is generally provided in July each year for the previous income year.
Timing – Contributions counting towards RESC vs the concessional contributions cap
RESC are reported for the income year to which the contribution relates. This may be different from the financial year in which they are received by the super fund.
By contrast, for contribution cap reporting, superannuation funds report the contributions for the income year in which they are received.
This difference in timing is illustrated in the example below.
Martin has a salary sacrifice arrangement with his employer to contribution up to the full concessional contributions (CC) cap of $25,000 in 2017/18 year.
His employer typically makes the contributions after the end of each quarter when superannuation guarantee contributions are due. This means that one of the salary sacrifice contributions will not be paid until July 2018.
Martin’s employer will include the July contribution in its RESC reporting for 2017/18 as the contribution relates to this income year.
However, the July contribution will count towards Martin’s CC cap in the 2018/19 year.
RESC and Constitutionally Protected Funds
Constitutionally protected super funds (CPFs) are generally state government operated schemes that are exempt from federal taxation because of the general constitutional restriction on the Federal Government taxing State Governments.
Prior to 1 July 2017 contributions to a CPF, which if otherwise had been made to a funded taxed super fund would be reported as concessional contributions, were not reported by the CPF and were not counted towards the member’s CC cap. From 1 July 2017, these contributions count towards the CC cap. Irrespective of when the contribution was made these contributions do however fall within the definition of RESC where the employee has been able to influence the contribution (eg salary sacrificed contributions in excess of mandatory requirements).
For contribution cap questions refer to Macquarie’s Contribution Cap Companion.