Author Topic: Salary sacrificing vs diy  (Read 2010 times)

chouchouu

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Salary sacrificing vs diy
« on: March 20, 2018, 11:57:55 PM »
My last company screwed me over with salary sacrificing into my super. Am I correct in understanding that if I make the contributions myself and claim for the tax deduction that the benefit is the same as when having the company do it? I want to avoid the headache of having to chase it all up with my new company and ensuring I'm paid correctly.

mrcheese

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Re: Salary sacrificing vs diy
« Reply #1 on: March 21, 2018, 12:44:49 AM »
if you want to make contributions to your own super and then claim the reduced tax, you do need to arrange it beforehand with your super fund. I got all excited when the new rules were announced about claiming your own  outside-of-work contributions but then I looked into it and decided that it is just too much bother and so I just make extra pretax (i.e. taxed at 15% instead of my marginal rate) contributions through payroll.
https://www.ato.gov.au/Individuals/Super/In-detail/Growing/Claiming-deductions-for-personal-super-contributions/?anchor=Howtomakeaclaim#Howtomakeaclaim

how did your previous employer do you wrong? did they process it as a post tax contribution?

chouchouu

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Re: Salary sacrificing vs diy
« Reply #2 on: March 21, 2018, 02:02:54 AM »
My last company screwed me over with salary sacrificing into my super. Am I correct in understanding that if I make the contributions myself and claim for the tax deduction that the benefit is the same as when having the company do it? I want to avoid the headache of having to chase it all up with my new company and ensuring I'm paid correctly.

They didn't make the extra contributions at all. In fact they've only just made my super contributions last week and only because I reported them to the ATO. I finished working there in July.

chouchouu

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Re: Salary sacrificing vs diy
« Reply #3 on: March 21, 2018, 02:13:50 AM »
So apparently between 2 and 11 percent of companies are short changing their employees super according to this article and many companies calculate the sacrificed super as part of the company owed super. https://www.theaustralian.com.au/national-affairs/treasury/employers-face-6bn-superannuation-gap-crackdown/news-story/b0f8882fee0e727980c6d835fc27252b

Pretty outrageous, I think I'll just do the paperwork and go the tax refund way. I've always found the tax department to be reliable!

mjr

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Re: Salary sacrificing vs diy
« Reply #4 on: March 21, 2018, 01:21:17 PM »
It's legal, they're allowed to do it.

It does make them unattractive as far as being an employer goes.

If you find yourself in this situation (and want to stay), let them make the SGC payments all year and then do one or more one-off contributions at the end of the financial year to get you up to the cap.

Luckyvik

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Re: Salary sacrificing vs diy
« Reply #5 on: March 21, 2018, 05:31:52 PM »
The govt has proposed changes to super so that employers can’t do this anymore.

Shaz_Au

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Re: Salary sacrificing vs diy
« Reply #6 on: March 25, 2018, 06:23:19 PM »
Hi chouchouu, that's my understanding.

We are planning on taking this up this year now that the rule change allows us.  One of our employers short changes their staff by using the salary sacrificed super contributions to reduce their own :( I really wish they would hurry up and close this loophole.  We are doing exactly what mjr suggested.

I even made up a excel spreadsheet to calculate everything but you could just use the online moneysmart one and save yourself some time!

The process looks easy to me.  Make your contributions, fill in the notice of intent form, send it to your super provider (either at the EOF or before you do your tax, whichever is earliest), make sure you get written confirmation from your super provider.  Make the claim when you do your tax.

stashgrower

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Re: Salary sacrificing vs diy
« Reply #7 on: March 26, 2018, 04:24:44 AM »
I thought that if you specified in writing to your employer that super is to stay at 9.5% of gross, then they have to do that. Any salary sacrifice is (and should be) extra.

Shaz_Au

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Re: Salary sacrificing vs diy
« Reply #8 on: March 27, 2018, 10:32:16 PM »
Taken from the Cross Agency Superannuation Guarantee Working Group Interim Report:

Quote
ISA Recommendation 2:
 Amending the
Superannuation Guarantee Administration Act 1992
(SGAA) so that employers cannot count salary
sacrifice amounts towards compliance with their
obligation to pay superannuation guarantee
Key Points
•
A small number of employers are using their employe
es’ salary sacrifice arrangements to satisfy their
superannuation guarantee obligation. ATO compliance
 data does not indicate the practice is widespread.
•
Some  employers also  calculate  their  superannuation
guarantee  obligation  on  the  lower,  post  salary
sacrifice, earnings.
•
Both problems can be resolved with straightforward
legislation that would address anomalies.

One of employers is doing dot point 2. We are going to use the new Concessional Superannuation Deduction to get around this (referred to as "DIY" in this thread). 

chouchouu

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Re: Salary sacrificing vs diy
« Reply #9 on: April 14, 2018, 05:39:38 AM »
Thanks for all the feedback and sorry for the late reply. My new employer is honest and payroll is done through Deloitte so I don't see any problems with having my super paid appropriately this time. So nice to have a boss who is reliable!