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Reportable Employer Super Contributions - Not Reportable Option Setting required

John Overweel

The change to super payments every payday and the associated reporting has led to an unexpected complication.

Churches are allowed to set up remuneration for their staff with a mix of salary and fringe benefits with the ratio of the two entirely at their discretion. Further, churches are not required to report the fringe benefits paid to their pastor. Obviously, this arrangement allows for a reduction in net tax payable.

With respect to the superannuation guarantee this is only required to be paid on the salary component of the remuneration.

However, this is a disadvantage to the employee so the way we have dealt with it in our Reckon One (R1) accounting software is to create a new pay item "Additional Super" and calculate the rate from our remuneration spreadsheet and apply it as additional super.

The previous regime allowed us to pay superannuation quarterly and I classified it as all Super Guarantee through the ATO’s SBSCH (their now eased super clearing house) because, in principle, it was.

However, with the new payday payment regime this is now reported to the ATO in two components and the additional super is reported as such and appears under a heading of RESC: Reportable Employer Superannuation Contributions.

Acc to ATO website https://www.ato.gov.au/businesses-and-organisations/super-for-employers/setting-up-super-for-your-business/identify-reportable-employer-super-contributions :

“The extra contributions are reportable super contributions for employees, unless you show that:

• the extra contributions are made for administrative simplicity

• a documented policy is in place that doesn't allow an employee to influence the contributions you make on their behalf.”

We believe our use of providing the "extra" super falls in this category.

Since the ATO allows for this scenario, it follows that the accounting software should have the capability for the user to flag this pay item as "Not Reportable".

Could you escalate and implement this as soon as practicable?

Status: Already Offered

Comments

Rav

Hi @John Overweel

Thanks for raising this idea and outlining your scenario in detail, the context really helps.

Just to make sure I’m understanding correctly, the goal here is to calculate and pay an additional super component within the pay run, but not have that portion reported to the ATO as reportable employer super contributions (RESC) through your STP submissions. Is that right?

If so, one option you could explore in Reckon One is using a Productivity Super pay item. This type of super contribution item is treated as an employer additional contribution but is not included in the Super Guarantee amount and is generally not reported to the ATO as part of STP reporting in the same way RESC is.

That said, it’s really important to note that the appropriateness of using a Productivity Super item in this way will depend entirely on your specific arrangement and whether it aligns with ATO requirements. In particular, you’ll need to ensure that your treatment of these contributions meets the ATO’s criteria around what is, and isn't, considered reportable employer super contributions including the conditions you referenced around administrative simplicity and documented employer policy.

Because these obligations can vary based on your setup, we’d strongly recommend confirming this approach with your accountant, tax advisor, or the ATO to ensure it is compliant with your reporting requirements before implementing any changes.

Let me know if that helps.

John Overweel

Hi Rav, Yes, you have understood my goal correctly. Since raising this issue, I have seen my accountant, and he has suggested another workaround that is suitable in the Australian context for employers who are churches.

Thank you for following this up so soon and for the Productivity Super pay item suggestion. Thank you for the warning regarding the propriety and legality of its use.

Is Productivity Super pay item use documented within R1?

Rav

Thanks for confirming John and glad to hear you've also found a separate solution as well.

If you're comfortable with sharing that other workaround here with the Community it might be helpful for other folks who are in the same scenario. No pressure or obligation though.

In regard to the productivity super item, yes this is available as a default super-type item when you create a new superannuation item (screenshot example below).

We can't advise on when and how to apply this item as its use depends entirely on your specific circumstances and whether it aligns with ATO requirements as mentioned above.

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