Superannuation (Salary) Regulations (Amendment)

Administered by Department of Finance

Legislation au F1996B02201 Regulations Not in force Legislative Instrument

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EXPLANATORY STATEMENT

STATUTORY RULES 1988 NO 250

ISSUED BY THE AUTHORITY OF THE MINISTER FOR FINANCE

SUPERANNUATION ACT 1976 - SUPERANNUATION (SALARY) REGULATIONS (AMENDMENT)

Section 168 of the Superannuation Act 1976 (the Act) provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing matters which the Act requires or permits to be prescribed, or which are necessary or convenient to be prescribed, for carrying out or giving effect to the Act.

The Act makes provision for and in relation to an occupational superannuation scheme for persons employed by the Commonwealth, and for certain other persons.

Under the Act, the rate of fortnightly contributions payable by an eligible employee (contributor) is expressed as a percentage of the fortnightly rate of his or her salary. In accordance with subsection 3(1) of the Act, “fortnightly rate of salary” in relation to a contributor means an amount equal to one-twenty-sixth of the amount of his or her annual rate of salary.

The rates of employer-financed invalidity, age and early retirement pensions payable under the Act are expressed as percentages of the former contributor’s final annual rate of salary. In accordance with subsection 3(1) of the Act, “final annual rate of salary” means, in the generality of cases, the person’s annual rate of salary on his or her last day of service.

Subsection 5(1) of the Act provides that “salary” means salary or wages and:

(a) includes any allowance, or the value of any allowance, or any fee, that is an allowance or fee of a kind that, under the regulations, is to be treated as salary for the purposes of the Act; but

(b) does not include any part of any salary or wages that, under the regulations, is not to be treated as salary for the purposes of the Act.

Sub-section 5(2) provides that, subject to sub-section 5(3), the “annual rate of salary” of a contributor on a particular day is an amount equal to the amount per annum of the salary for the purposes of the Act payable to the contributor on that day. Sub-section 5(3) provides that the regulations may provide that, in a case specified in the regulations, the annual rate of salary of a contributor on a particular day shall, for the purposes of the Act or a provision of the Act specified in the regulations, be an amount equal to such amount per annum as is ascertained under the regulations.


Regulations for the purposes of section 5 are contained in the Superannuation (Salary) Regulations.

Part II of the Regulations (regulations 4 to 8) sets out the allowances that are to be treated as salary for the purposes of the Act and the conditions under which certain of those allowances are to be treated as salary. Regulation 5 lists allowances that are to be treated as salary and includes in paragraph 5(1) an allowance of a prescribed kind that is payable on a regular basis to a contributor. The question of whether an allowance is payable on a regular basis and other matters relating to allowances of a prescribed kind are dealt with in regulations 6, 7 and 8.

Allowances that are allowances of a prescribed kind for the purposes of Part II are listed in regulation 4. They include in paragraph 4(a) an allowance that is payable to an eligible employee by reason that he or she temporarily performs the whole or a part of the duties of an office of a higher classification than the classification of the office occupied.

There are circumstances, however, where a person temporarily performing the duties of a higher positions does not receive an allowance in respect of the temporary performance of these duties but receives salary at the rate normally applicable to the occupant of the higher position. It is intended that, for the purposes of the Act, that part of the higher salary that relates solely to the performance of the duties of the higher position be treated in the same way as an allowance of a kind described in paragraph 4(a) of the Regulations.

The Superannuation (Salary) Regulations (Amendment) give effect to that intention. A new subregulation 4(2) is inserted to provide that the part of the higher salary that is payable solely because of the person acting in a higher position and not on any other ground or additional ground will be treated as an allowance of a prescribed kind described in paragraph 4(a) of the Regulations. Any allowance payable to the person in connection with the performance of the duties of the higher position but which is not related solely to the performance of those duties is to be treated on the basis prescribed in the Regulations in relation to the particular allowance.

The amending Regulations operate from the date of their gazettal.

Overview

The Superannuation (Salary) Regulations (Amendment) Statutory Rules 1996 were enacted to address a gap in the interpretation of allowances and salary within the Superannuation Act 1976. This amendment was issued by the authority of the Minister for Finance to ensure clarity and consistency in the treatment of allowances under the Act, particularly for employees temporarily performing duties of a higher classification. The policy objective of these regulations is to ensure that any part of a higher salary, attributable solely to the temporary performance of higher duties, is treated in the same manner as a prescribed allowance for superannuation purposes. This ensures that the superannuation contributions and benefits are accurately calculated based on the full remuneration for the duties performed.

Scope and Application

The Superannuation (Salary) Regulations (Amendment) applies to persons employed by the Commonwealth, specifically targeting eligible employees under the Superannuation Act 1976. It governs the treatment of certain salary components, particularly allowances, for the purposes of superannuation contributions. The amendment clarifies that a part of a higher salary, which is attributable solely to the temporary performance of duties of a higher classification, is to be treated as an allowance of a prescribed kind for calculating superannuation contributions. This regulation ensures that such allowances are included in the computation of the annual rate of salary for superannuation purposes, thereby enhancing the accuracy of contribution calculations. The amendment does not alter the existing framework but refines the treatment of specific salary components within the superannuation scheme. The regulations are applicable nationally as they pertain to Commonwealth employees and the Commonwealth-administered superannuation scheme. The changes introduced by these regulations commence from the date of their gazettal.

Key Provisions

The Superannuation (Salary) Regulations (Amendment) primarily focus on clarifying the treatment of certain allowances and salary components for superannuation purposes under the Superannuation Act 1976. Section 168 of the Act allows for the Governor-General to make regulations that are necessary to carry out the Act effectively, and these regulations aim to ensure that specific salary components are appropriately considered when calculating superannuation contributions. Specifically, subregulation 4(2) of the Regulations now provides that any part of a higher salary that an employee receives solely because they are temporarily performing duties of a higher position is to be treated as an allowance of a prescribed kind. This amendment ensures that such salary components are included in the calculations of annual rates of salary and fortnightly rates of salary for superannuation purposes. Under these Regulations, the obligations imposed on employers and employees are primarily about the accurate reporting and inclusion of relevant salary components in superannuation calculations. Employers must ensure that they include the correct components of salary when calculating superannuation contributions, particularly when employees are temporarily performing duties of a higher classification. Employees, in turn, must ensure that any higher salary received due to temporary higher duties is correctly reported and included in their annual salary rate for superannuation purposes. Failure to comply with these Regulations can lead to incorrect superannuation contributions being made, which can result in financial discrepancies and potential penalties. Under the Superannuation Act 1976, there are specific provisions for the enforcement of compliance. For instance, if an employer fails to make the required superannuation contributions or miscalculates the amount due, they could face penalties. The maximum penalties for non-compliance with superannuation laws can be significant, including fines and potential imprisonment for serious breaches. Additionally, employees who do not report their salary components correctly can also face civil or criminal consequences, depending on the nature and extent of the breach. In summary, the Superannuation (Salary) Regulations (Amendment) aim to clarify and ensure the accurate inclusion of certain salary components in superannuation calculations. Employers and employees have specific obligations to correctly report and include relevant salary components. Breaches of these Regulations can lead to penalties, including fines and imprisonment, underscoring the importance of accurate and compliant reporting.

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