Q&As

Q&A Minimum Super Guarantee for high income earners

by Knowledge Shop Help Desk

3 min read

09/02/24 16:07

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Here’s a question from one of our awesome members on the minimum super guarantee requirements for a high income earner.

Note that the answer is only applicable to the question asked.

Question

An employee has only one employer. The employee's salary is more than $400k per annum.

Can the employee (high salary earner), request that the employer stop making superannuation guarantee payments to their super fund as it will go over the $27,500 cap? And, ask the employer to pay the excess as a salary?

If so, what kind of written agreement do the employee and the employer need to make?

Thanks.

Know the answer?

Under the super guarantee (SG), the employer meets their minimum SG requirements once they have paid super up to the maximum contributions base each quarter ($62,270 per quarter for FY24), which equals about $27,398.80 in contributions per annum if the employee earns more than $62,270 or more each quarter.

Whether the employer needs to go above this depends on the employee's contract or agreement.

Some contracts may say SG applies up to the legal mandated SG limits or something similar. If that was the case, the employer could legally stop at the maximum contributions base. If this client has been exceeding the cap, it sounds like their agreement may stipulate that SG is payable on all salary and wages.

Sometimes we see high earning employees agree with their employer to cap contributions at either the maximum contributions base or the annual cap (currently $27,500) and pay the rest as salary. The employer would need to agree with this and there would normally be a new employment contract issued. If the employer agrees to this, they would have the agreement drafted by their legal advisers.

There really isn't anything to do at the ATO end as the employer will meet their legal obligations as long as the ATO can see that SG, up to the maximum contributions base, has been paid.

As we get closer to the end of the financial year, high income earning employee's might already have an excess. Any new arrangement could be put in place from 1 July.

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