Employees and Employers can choose to make additional voluntary contributions to Employees’ Superannuation accounts on top of the compulsory Superannuation Contribution Guarantee. There are two types of voluntary contributions:

Concessional Contributions

These are payments made into the employees’ Superfunds which have not yet been taxed. Concessional contributions are not counted as assessable income for tax purposes. However, these payments are taxed into the Superfund at a rate of 15%. Concessional contributions must be reported in the employees’ payment summaries as Reportable Employer Super Contributions (RESC). Employees should be aware of how these contributions affect their super balance as these payments are capped every year. Check the ATO Website for current concessional contribution caps.

There are two types of Concessional Contribution Payments:

Employee Contributions (Salary Sacrifice)

Super salary sacrifice is an arrangement where the Employee makes with the Employer to forego part of their salary towards their Superannuation. Super Salary Sacrifice is paid in addition to the compulsory Super Contribution Guarantee.

The sacrificed component of the Employee’s pay for superannuation is not subject to pay as you go (PAYG) withholding tax, this amount is also not considered a Fringe Benefit.

When an Employee requests a Salary Sacrifice Arrangement, this should always be addressed in writing.

Employer Contributions

Employer Contributions are additional Superannuation voluntary payments the Employer chooses to pay to the Employees. They are generally calculated as an additional percentage of the employees’ Ordinary Time Earnings.

Non Concessional Contributions

These are payments made into the Employees’ Superannuation funds after being taxed.

Voluntary Super Contributions in Xero

Voluntary Superannuation Contributions in Xero are set up within the individual employee’s Pay Template. They can be set up as either a percentage of the employee’s pay or a fixed amount per pay period.

1. Go to Payroll > Employees
2. Select the Employee and go to the [Pay Template] Tab
3. Click on [Add Superannuation Line]
   
   è  The Add a Superannuation Line screen
   
   
4. Select/Enter the following details:
   • Contribution Type > select either Pre-Tax Voluntary Contribution (RESC) for Salary Sacrifice arrangements, or
                                                     Additional Employer Contribution (RESC) for Employer Super contributions, or
                                                     Post-Tax Voluntary Contribution (Employee) for after-tax Super contributions.
   • Calculation Type > select either Fixed Amount or Percentage of Earnings
   • Expense Account > select the correct Expense account based on the type of contribution chosen and the Employee type
   • Liability Account > select the correct Liability account based on the type of contribution chosen
   • Payment Frequency > select either Monthly or Quarterly depending on how frequently the business pays superannuation
     Note: After-Tax Superannuation contributions must be paid monthly, even if the business normally pays Superannuation Quarterly.
5. Click on [OK]
   è  The Superannuation Line is added to the Employee Pay Template
   
   
   
   
6. Type the voluntary additional Superannuation amount (per pay period) or percentage and click on [Save]

Training Resources & References

ATO - Superannuation Caps

ATO - Salary Sacrifice Arrangements