Xero payroll – changes to salary sacrifice and superannuation from 1 January 2020

Did you come back to work and realised you have issues with Xero payroll? Well, there’s nothing wrong with the actual Xero payroll, but the ATO rules around salary sacrifice and superannuation have changed from 1 January 2020.

Legislation changes from 1 January 2020 and how will Xero payroll cope

From 1 January 2020, salary sacrificed super contributions can’t be used to reduce your super guarantee obligations, regardless of the amount your employee elects to salary sacrifice.

This means the salary sacrificed amount does not count towards your super guarantee (SG) obligations.

A further change is that the super guarantee will be 9.5% of the employee’s ordinary time earnings (OTE) ‘base’. The base is the sum of:

  • the employee’s OTE
  • the amount salary sacrificed from the employee’s OTE.

You need to:

  • review your salary sacrifice arrangements to make sure you are:
    • using your employee’s OTE base to calculate your SG obligation
    • not counting salary sacrificed amounts towards the minimum amount of SG you have to pay
  • check that all your systems correctly calculate your SG obligations

What are changes in Xero payroll?

From 1 January 2020, if you had salary sacrifice setup, Xero payroll will not let you post a payrun without having to review the setup to ensure that you comply with these changes.


If you’ve already posted pay runs with a payment date on or after 1 January 2020, you’ll need to review these to ensure the calculations are correct. When you open an affected pay run, Xero shows a validation message which includes detail on employees that are reducing SGC amounts either using a superannuation line or deduction line.

If you can’t revert the payrun to draft that you may have processed in advance, (for example, if it has been submitted to ATO already), post an unscheduled payrun in Xero payroll to record the additional superannuation required.

If you need help with your bookkeeping, call us on 07 3160 7386.

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