Add-Ministry Inc - PAYG Summaries & Super Reporting Obligations

PAYG Summaries & Superannuation Reporting Obligations

Changes in Tax Law for the current financial year require superannuation contributions to be identified on PAYG Summaries as "Reportable Items". This would be a similar reporting obligation in many respects to the reportable fringe benefits area.

Religious institutions who engage religious practitioners for religious duties and make payments caught by Fringe Benefits Tax Laws are exempt from the obligation to report fringe benefits on PAYG Summaries. They are in a separate legal category to other employees. With reportable fringe benefits, most charities and religious institutions are obliged to report the benefits paid, - it is payments by a religious institution to religious practitioners in respect to religious duties that attract these special concessions.

There has been some thought that superannuation may attract the same exemption benefit for religious practitioners as is available under Fringe Benefits Tax. This is not the position.

A recent report just received from the Anglican Diocese of Melbourne summarises the matter very helpfully, so we quote from a part of their report: -

"The definition of reportable employers superannuation contributions in the Taxation Administration Act includes an amount contributed to a superannuation fund by an employer for the benefit of an individual, but only to the extent that one or both of the following apply: -

The individual has the capacity to influence the size of the amount, or
The individual has the capacity to influence the way the amount is contributed so their assessable income is reduced.

There is no reference to an award in the case of clergy; however the relevant concept is capacity to influence.

Contributions required by law fall outside the definition of a reportable employer superannuation contribution, as the employee has no capacity to influence the size of the amount or the way it is contributed. Provided there is an agreement to make contributions and the employee has no capacity to influence the terms of the agreement, the contributions will not be reportable superannuation contributions."

Normal superannuation guarantee contributions are therefore exempt from these provisions. Salary sacrifice superannuation will normally become reportable benefits. The situation with the Anglican Diocese of Melbourne is that they have what is known as their "Clergy Superannuation Act" which obligates clergy to make a further contribution in excess of superannuation guarantee obligations. Because it is a legal obligation of the clergy that item is not reportable - it is treated the same as superannuation guarantee.

There may be other instances where, because of obligations within the particular Christian denomination, the clergy have an obligation to contribute at a higher level than 9% from their own salary package. Provided they have no opportunity to influence the amount contributed, it appears probably that such amounts would also be exempt. Nevertheless it would be wise for the individual Christian denomination to check the matter with ATO. In such an event it would be timely to make such enquiry now - well ahead of the end-of-year reporting obligations.

There may be other instances where a particular industrial award imposes a similar obligations. In such an instance it appears likely that the concession will be available there also.