What are Reportable Superannuation Contributions?
Reportable superannuation contributions (RSC) refer to contributions made to a super fund that exceed the compulsory employer contributions and are reported to the Australian Taxation Office. There are two main types of reportable contributions – Personal deductible contributions and Reportable Employer Contributions.
The Importance of Understanding Reportable Super Contrbutions
Understanding Reportable Super Contributions is crucial as they affect your tax liability and eligibility for certain government benefits. They are not included in your assessable income but are considered in the calculation of tax offsets such as the low-income super tax offset and the spouse super tax offset. Your Reportable Super Contributions can impact your eligibility for government benefits, including the age pension.
Examples of Reportable Super Contributions
To provide a clearer understanding of reportable superannuation contributions, the following table outlines what is and isn’t considered a reportable contribution.
| Contribution Type | Reportable Super Contribution? |
|---|---|
| Compulsory employer contributions | No |
| Salary sacrifice contributions | Yes |
| Personal deductible contributions | Yes |
| After-tax contributions | No |
| Spouse contributions | No, unless you're eligible for a tax offset |
Reportable Personal Deductible Contributions
One way to maximize reportable superannuation contributions is by making personal deductible contributions to your super fund. By doing so, you can reduce your taxable income while increasing your super balance. It is important to stay within the contribution limit of $27,500 per financial year, which includes any employer super guarantee contributions, salary sacrifice contributions, personal contributions claimed as a tax deduction, and other voluntary contributions. However, the carry forward rule can allow you to exceed this cap. Learn more about contribution caps
Reportable Employer Super Contributions
Reportable employer super contributions (REC’s) are contributions made by an employer to an employee’s super fund that exceed the minimum super guarantee requirements. These contributions are not included in the employee’s assessable income but are considered in the calculation of tax offsets and government benefits. It is crucial to keep track of reportable employer super contributions to ensure they stay within the contribution limit and avoid additional tax liability.
To better understand reportable employer super contributions, refer to the table below for examples of what is and isn’t reportable.
| Contribution Type | Reportable Employer Contribution? |
|---|---|
| Salary sacrifice contributions | Yes |
| Contributions paid under a defined benefit interest | Yes |
| Contributions paid for exceeding concessional contributions cap | Yes |
| Non-cash benefits provided as a salary sacrifice | Yes |
| Bonus payments paid as a salary sacrifice | Yes |
| Standard employment termination payments | No |
| Unused annual leave paid out on termination | No |
How do Employers Report these Contributions?
Reportable employer super contributions need to be listed on each employee’s payment summary (group certificate) at the end of each financial year.
Spouse Reportable Superannuation Contributions
It’s important to keep an eye on your spouse’s reportable superannuation contributions as well since they can impact the family’s finances.
Firstly, there may be opportunities to make additional contributions and increase the overall retirement savings for the family such as additional salary sacrifice or a spouse contribution.
Secondly, if your spouse exceeds the contribution limit it can lead to additional tax liabilities.
Thirdly, if your spouse’s contributions are eligible for a tax offset or government benefits, it can reduce your overall tax liability and potentially increase your family’s disposable income.
Finally, some government benefits are based on the income and super contributions of you and your spouse. Therefore you will need your spouse’s reportable superannuation contributions when applying for these benefits.
What Do I Need to Do to Disclose Reportable Super Contributions?
If you have made reportable superannuation contributions, you need to include them in your tax return for the financial year. You can find the information regarding your reportable super contributions made through your employer on your payment summary. If you’ve made any personal deductible contributions you’ll need to include these in your tax return too.
Are Reportable Super Contributions Taxable?
Reportable super contributions fall under the category of concessional contributions, which means that a contributions tax of 15% will be applied to the contribution when deposited into your super fund, similar to any other concessional contribution. If you earn above $250,000 for the financial year, you may be subject to an additional Division 293 tax of 15% on your reportable super contributions, making the tax rate 30%. These contributions are not subject to individual income tax.
Seek Advice from a Financial Advisor
Making informed decisions about reportable superannuation contributions is crucial in maximizing the benefits of superannuation. It’s essential to seek advice from a financial advisor when making decisions about super contributions and the impact of reportable superannuation contributions on government benefits. A financial advisor can also help you create a retirement plan that is tailored to your specific needs and goals, to help you make the most of your super.