Salary Sacrifice Setup: Super From Ordinary Earnings

If an employee salary sacrifices ordinary earnings for superannuation contributions, here's how to set up their income and salary sacrifice pay items. In this case, employer super guarantee is calculated on the salary sacrificed contribution.

Income pay item setup

On the Pay Item Liabilities form (MPPP1025):

• Select both of the Liable for Superannuation (SG) and Liable for Qualifying Earnings (QE) checkboxes.
• Set the ATO category to Gross Payments.

Salary sacrifice pay item setup

On the Pay Items form (MPPP2210):

• Set the Type to Employee Super.
• Set the Taxation field to Pre-tax deduction : Standard PAYG.
• On the Additional Info tab, set the Category to SS Salary Sacrifice.

On the Pay Item Liabilities form (MPPP1025):

• Do not select either of the Liable for Superannuation (SG) and Liable for Qualifying Earnings (QE) checkboxes.
  Note:

  You don't need to select the liabilities because the employee's income pay item already include their salary sacrifice portion. Since the salary sacrifice pay item is a pre-tax deduction, setting it as liable would reduce the superannuation guarantee calculation and understate your super obligation.
• Set the ATO category to Salary sacrifice superannuation + RESC.

Example

Let's say Sarah earns $3,000 and chooses to salary sacrifice $200 into her super fund. This means her total earnings that are liable for super are $3,000.

Her employer calculates super guarantee on the full $3,000 at a rate of 12% (the minimum compulsory rate for 2026–27), resulting in an employer super contribution of $360. PAYG withholding is calculated on her taxable wages of $2,800.

By the end of the pay period, Sarah's super fund receives a total of $560:

• $360 in employer super guarantee.

• $200 in employee salary sacrifice contributions.

Here are the amounts that would be reported to the ATO as part of Single Touch Payroll (STP):