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Superannuation contributions made by an employer are taxable wages and are liable for payroll tax in New South Wales.
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What is a superannuation contribution?
The Australian superannuation system requires employers to make regular contributions to their employees’ superannuation funds. This is known as the superannuation guarantee.
A superannuation contribution is an amount paid or payable by a business in respect of:
an employee
a director, or
a person taken to be an employee.
Superannuation contributions include:
monetary contributions (e.g. cash payments and electronic transfers), and
non-monetary contributions (e.g. marketable securities and property).
Contributions may be paid:
to a superannuation fund
as a Super Guarantee Charge, or
to any other form of superannuation, provident or retirement fund or scheme, including:
the Superannuation Holding Accounts Special Account
How superannuation contributions are treated for payroll tax
The definition of “wages” in the Payroll Tax Act 2007 (PTA) is broad and is not restricted to wages or salaries. It includes superannuation contributions. See section 17 of the PTA.
As a result, employer-funded (pre-income tax) superannuation contributions are liable for payroll tax.
A concessional (pre-income tax) superannuation contribution is classified as an employer contribution and is liable for payroll tax. Contributions made from the employee’s pre-income tax entitlements are considered salary sacrifices. Read the salary sacrifice page for more details.
After-tax contributions by an employee to a superannuation fund are not liable for payroll tax. This applies even when the fund is administered by the employer. This is because the amounts will have already been declared as part of the gross “Salaries and wages” of the employer's payroll tax return.
Open the headings below for more details on the payroll tax treatment of specific superannuation topics.
Your business must pay the Super Guarantee Charge (SGC) if it does not pay an employee's superannuation guarantee amount in full, on time and to the right fund. For more details read the SGC page on the ATO’s website.
A SGC paid by your business is liable for payroll tax.
The Special Account held by the ATO for small superannuation balances which are unable to be paid into a person’s nominated superannuation fund is not considered to be a superannuation fund.
A superannuation, provident or retirement fund or scheme is considered unfunded if the money that an employer is supposed to contribute for an employee is not actually paid while the employee is working for that employer.
Generally, a fund is considered unfunded for an employee only if it is a defined benefit fund that had more money than needed (a surplus) during any part of the employee’s period of service.
Any payments made by an employer when the employee's unfunded benefit is paid, are subject to payroll tax in the month they are paid.
Any superannuation contributions that would normally attract payroll tax when made by an employer on behalf of an employee, director, or other individual, will still be subject to payroll tax even if they are made by someone else, or for someone other than the intended employee, director, or individual.
Revenue Ruling PTA 040 – Payroll tax: exempt superannuation contributions pre-1 July 1996 services covers the legislative background to the decision in Qantas Airways Limited v Chief Commissioner of State Revenue [2015] NSWSC 826 and clarifies how the Chief Commissioner will apply the exemption for defined superannuation benefits in respect of services rendered or performed by an employee before 1 July 1996.
When is a superannuation contribution taken to be paid
When an employer sets aside money, or something valuable, into a superannuation fund or similar retirement savings plan, it is considered that they have made a superannuation contribution at the time the money or valuable item is set aside.
The amount of that contribution becomes liable for payroll tax in the monthly period in which the money or other valuable item is set aside.
Non-monetary contributions
A superannuation contribution of anything that is worth money is taken to be paying a superannuation contribution of the amount equal to its value.
The value of a superannuation contribution that is paid or payable in kind is the greater of the value:
agreed between the employer and the employee
attributed to those contributions in arrangements between the employer and the employee, and
ascertainable for those contributions from arrangements between the employer and the employee.
Superannuation contributions when wages are underpaid
If a business has not paid the full wages of an employee and needs to make up the shortfall, they must also pay extra superannuation contributions at the same time they pay the owed wages.
Any additional superannuation contributions are to be included in the payroll tax return for the month in which the contributions are paid.
How to declare superannuation contributions
Employer superannuation contributions must be declared in the “Employer superannuation contributions” field in your payroll tax returns.
The table below sets out how to declare different types of superannuation contributions.
Type of superannuation contribution
How to declare
Apprentice or trainee superannuation
For apprentices and trainees eligible for the payroll tax rebate, add contributions to the “Apprentice and trainee wages” field of returns.
Reduce the gross “Employer superannuation contributions” figure for the period by a corresponding amount.
Add contributions to the “Employer superannuation contributions” field of your returns.
For monthly returns, declare in the month in which the contribution is paid, or the premium is paid.
Superannuation Holding Accounts Special Account
Add deposits to the “Employer superannuation contributions” field of your returns.
For monthly returns, declare in the month the deposit and declaration are made to the ATO.
Super Guarantee Charge
Add charges to the “Employer superannuation contributions” field of your returns.
For monthly returns, declare in the same month that it is paid or payable to the ATO.
Wholly or partly unfunded fund or scheme
Add payments in the “Employer superannuation contributions” field of your returns.
For monthly returns, declare in the month the payments are paid.
Amounts paid outside the payroll system
The remuneration of directors and other members of the board of management of a company are sometimes paid as part of a package that is recorded in the financial statements of the company. This can also be the case for certain key personnel of large corporations.
Any amounts directed to be paid as superannuation in any form are employer superannuation contributions.
Regardless of how they are reported in financial statements, include in the “Employer superannuation contributions” field of your payroll tax return.
Interstate wages
Employer superannuation contribution amounts are liable for payroll tax in each state or territory in which they are paid.
Read the nexus provisions page for help with determining which state or territory to declare superannuation contributions.
Why accuracy is important
It is important that you correctly declare superannuation contributions in your returns. Errors may result in the underpayment of payroll tax, which is known as a tax default.
Interest will be imposed on any underpayments. Your business may also be liable for penalty tax. Read the interest and penalty tax page for more details.
Always maintain relevant records and working papers showing how your superannuation contributions were calculated. Records and working papers must be:
retained for at least 5 years
sufficient for a payroll tax liability to be properly assessed
in English, or a form easily translated to English, and
readily available to us if requested, for example as part of a payroll tax audit.
Voluntary disclosure
Contact us to make a voluntary disclosure if you have not declared all liable amounts in your monthly and/or annual returns, including previous financial years.
Voluntary disclosures attract a reduced level of penalty tax compared to cases where we identify an underpayment. Interest will still be imposed.
Non-compliance identified through our data matching activities will result in penalty tax and interest charges, in addition to any underpayments detected.
Common errors with superannuation contributions
Payroll tax audits show that customers often make the following errors when declaring superannuation contributions in their payroll tax returns:
