Are you across the superannuation salary sacrificing legislation that came into effect on January 1, 2020?
Employers who direct a percentage of employees' income into their super instead of their bank accounts need to be aware that the laws have changed, and you may need to update your Xero settings to comply with the ATO change.
Superannuation Guarantee Changes in 2020
Under the Superannuation Guarantee Contributions (SGC) laws, employers are required to pay a percentage of an employee’s annual earnings as a contribution towards their super. Currently, it’s set at 9.5%, and before the changes, employers legally only had to make up the amount that an employee hadn't sacrificed to meet this threshold. For example, if an employee was salary sacrificing 6% of their salary into their super, the employer only had to make up the additional 3.5% contribution.
From January 1, 2020, employers must pay a total of 9.5% of your gross annual income, including any amounts salary sacrificed.
If you’re an employer who already pays the compulsory super guarantee regardless of any salary sacrifice contributions, there will be no need to change any settings. If not, keep reading.
How to update your Xero SGC Settings
If you’re yet to do a pay run, Xero will support you by flagging employees that you’ve previously paid less super to. The employee name and whether they salary sacrificed super, and/or opted for a deduction will be highlighted, and an alert will show you to update any settings.
If you’ve already posted a pay run and haven’t updated your settings, you may need to review payments to ensure you are complying with the superannuation guarantee changes. You can make these changes by reverting and reposting the pay run or posting an unscheduled pay run to amend.