RESC deduction type for Salary Sacrifice Super payments

Overview

We made significant changes to how pre-tax deduction categories are configured. And also how they behave when used to pay contributions to a super fund that needs to be reported as Reportable employer super contribution (RESC). We made these changes to help users avoid setting up RESC deductions incorrectly and, therefore, being reported incorrectly. 

RESC deduction type 

A new deduction type is now available when setting up a pre-tax deduction category - Reportable employer super contribution (RESC). You can only use the RESC deduction type for salary sacrifice super contributions; i.e. a pre-tax deduction that is paid directly to the employee's super fund.

This deduction type will be available and set by default as a default Salary Sacrifice Super deduction category for all new businesses created. Regarding existing businesses, this deployment includes updating any existing salary sacrifice super deduction categories with the RESC deduction type.

Pre-tax deduction categories 

We will update the following existing pre-tax deduction categories to the RESC deduction type.:

• System generated Salary Sacrifice Super pre-tax deduction categories. We will update any deduction category that fits this criterion for previous payment methods used in a pay run. Including the default Salary Sacrifice Super Deduction category that is made available by default when creating a new business; and
• Any pre-tax deduction category used in deductions that you paid to a super fund in the pay run. If at any point you use a pre-tax deduction category in manually paid or bank deposit deductions, we will not update the deduction category with a RESC deduction type; and
• Any pre-tax deduction category with the exact name Salary Sacrifice Super. 

Changes to payment options for deduction categories

The payment options available are now restricted when using a deduction category with the RESC deduction type. The changes will differ slightly for existing deduction categories versus newly created deduction categories. These changes are relevant for deductions set up as pay run inclusions as well as manually added to a pay run. When a deduction category has a RESC deduction type:

• Existing deductions will only have the 'paid to a super fund' option available. 
• New deductions will only have the 'paid to a super fund' option available. 

When a deduction category has a deduction type of pre-tax, i.e. not a RESC deduction type:

• Existing deductions will have the Paid to a Super Fund, Manual or Bank Account options available. 
• New deductions will only have the manual or bank account options available.

When a deduction category has a deduction type post-tax:

• Existing deductions will have the Paid to a Super Fund, Manual or Bank Account options available. 
• New deductions will have the Paid to a Super Fund, Manual or Bank Account options available. 

Existing pay run inclusion deductions

If an employee has an existing recurring deduction, set up as a pay run inclusion, using a Salary Sacrifice Super deduction category or a Pre-Tax Deduction category that has automatically updated to a RESC deduction type and the payment option is Paid Manually Bank Account, the user will need to update the payment option to a paid to a super fund.

In this case, we will display a warning that says RESC Deductions Should be Paid to a Super Fund. You can change the payment option on the Employee's Pay Run inclusions page and this will correct any further deductions going forward. 

We strongly advise that you do an audit on any previous deductions made using this deduction category. So as to make sure you update all historical payments to the Paid to a Super Fund option.

If an employee has an existing recurring deduction, set up as a pay run inclusion, using a non-RESC type, pre-tax deduction category but is being paid to a super fund already, no further action is required. These deductions will remain unchanged, but we will not label these as a pre-tax deduction paid to a super fund as opposed to the new RESC label on the pay-run inclusion.

Existing deductions in pay runs

If an employee has an existing deduction in a pay run using a Salary Sacrifice Super deduction category or a pre-tax deduction category that has automatically updated to a RESC deduction type and the payment option is Paid Manually/Bank Account, the user will need to update the payment option to Paid to a Super Fund. We will not allow the user to complete the pay run until this is corrected. If you try to finalise the pay run, a pop-up modal will appear and the names of the affected employees will then appear.

Once you close the modal, we will expand all affected employees’ earnings lines by default. The original payment method is removed and the user will need to select a super fund as the payment option for the relevant deductions and hit save:

Once you have updated all affected employees you can finalise the pay run. If the pay run populated deduction data using the employee's pay run inclusion setup, you will also need to fix the employee's pay run inclusions page, so the error does not continue to occur in pay runs going forward.

We strongly advise that you do an audit on any previous deductions that you made using this deduction category for this employee to make sure you updated all historical payments to 'paid to a super fund' as well.     

If an employee has an existing deduction in a pay run using a non-RESC type pre-tax deduction category but is being paid to a super fund already, no further action is required. These deductions will remain unchanged, but we will label them as salary sacrifice super in the pay run, as opposed to the new RESC label.

FAQs

  If an existing Salary Sacrifice Super deduction category has been used to pay deductions manually or to a bank account , will we still have to update this data?  

Yes. Even if the existing Salary Sacrifice Super deduction category was previously used to pay super manually or via a bank account, you will still update the deduction category with the RESC deduction type.

  I have a deduction type named Sal Sac Super which looks like we have mostly used it for deductions that we paid to a super fund! Why did it not automatically update to the RESC deduction type?  

The deduction type does not have the exact name with capitalisation variations. Also, even though it was mostly used in deductions that were paid to a super fund, all it takes is for the deduction category to have been used once in a manual payment for it to have not been updated.