30 June 2010

Reportable Employer Superannuation Contributions

The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP, has today announced a reform to clarify the scope of the reportable employer superannuation contributions definition, which is used in determining eligibility for a range of government financial assistance programs.

Reportable employer superannuation contributions (or RESC) are generally superannuation contributions made under a formal salary sacrifice agreement but include other contributions made on behalf of an individual that the individual has capacity to influence to ensure the definition is not subverted.

"The Government has become aware that contributions made on behalf of an individual, which the individual or their employer have no real capacity to influence, are being captured by the RESC definition and hence being considered income for means-tested tax and transfer system programs," Mr Bowen said.

These contributions typically include additional employer contributions that are prescribed in legislation and not capable of being influenced by the individual or their employer.

"This is not the Government's intent. The Government will amend the law so that RESC does not include contributions made on behalf of an individual pursuant to legislation or other requirement that the individual and their employer cannot directly control," Mr Bowen said.

The changes will apply from 1 July 2009 to ensure that the contributions are not captured by the RESC definition and assessed as income for means-tested tax and transfer system programs.

These changes do not alter the fact that contributions to superannuation made under a formal salary sacrifice agreement are RESC.

30 June 2010