Compulsory member contributions while stood down

Your compulsory member contributions owing are determined on a post-tax basis. However, if you choose to continue paying your contributions, you can choose to pay them on a pre-tax or post-tax basis. If you choose to opt in to transfer funds from your voluntary accumulation accounts, the post-tax amount owed will be transferred. If you are back at work and want to pay via salary sacrifice, you must use the pre-tax amount owed.

This is because salary sacrifice contributions are paid from your pre-tax salary, and are taxed at 15% when they reach your super account. This means the amount you salary sacrifice may not match up to the amount owing when it’s determined on a post-tax basis.

For example, if you owe $500 on a post-tax basis and contribute $500 via salary sacrifice, your contribution will have $75 in tax (or 15%) deducted when it reaches your super account. That means you have only contributed $425 of your $500 owing. In order to meet the $500 owing you would need to contribute $588 on a pre-tax basis.

Interest will begin to apply to unpaid compulsory member contributions from 1 May 2024. That means that if you received a notice from Qantas Super about your unpaid contributions and either chose to stop paying, or chose to keep paying but did not enter into an arrangement to pay your amount owing by the due date of 30 April 2024, an offset account will be created to track these unpaid contributions and interest will begin to apply from 1 May 2024. The interest rate is the same as the investment earnings that apply to Qantas Super’s defined benefit assets. You can view these by downloading our weekly credited interest rates (CIRs).

Yes. This is because your compulsory member contributions owing are determined on a post-tax basis. Meanwhile, because salary sacrifice contributions are paid from your pre-tax salary, they’re taxed at 15% when they reach your super account. This means the amount you salary sacrifice may not match up to the amount owing.

For example, if you owe $500 on a post-tax basis and contribute $500 via salary sacrifice, your contribution will have $75 in tax (or 15%) deducted when it reaches your super account. That means you have only contributed $425 of your $500 owing. In order to meet the $500 owing you would need to contribute $588 on a pre-tax basis.

If you set up a salary sacrifice arrangement, your payments moving forward will be managed by Payroll, and you will no longer be bound to the due date specified on the statement you received from Qantas Super. However, you must enter into the salary sacrifice arrangement before the due date on the statement you received from us.

For Division 3 members, we will deduct the unpaid compulsory member contributions from your redundancy benefit when it is paid to you, or after it’s transferred into the Gateway Division.

If you haven’t entered into an arrangement to pay your contributions owing by salary sacrifice or by transferring funds from your voluntary accumulation accounts by 30 April 2024, you have agreed that you will be treated in accordance with Option 1; that is, you request to suspend your obligation to pay all outstanding and future compulsory member contributions while you’re stood down. In that case, we will create an offset account to track these contributions. From 1 May 2024, this account will have interest applied to it at the same rate as the investment earnings that apply to Qantas Super’s defined benefit assets. You can view these by downloading our weekly credited interest rates (CIRs).

There are caps on the contributions that you can make into super on both a before-tax (concessional) and an after-tax ( non-concessional) basis. If you exceed one or both of these caps you will incur tax penalties. Any contributions you and your employer pay will count towards your contributions caps in the financial year that you pay them.

If you have chosen Option 2, to continue paying your contributions, you can pay them in one of two different ways. This means:

If you pay via salary sacrifice
If you pay your contributions via a salary sacrifice arrangement with your employer via the Stand Down Member Contributions Salary Sacrifice Agreement form on The Terminal, they will be classified as pre-tax compulsory member contributions, rather than pre-tax voluntary contributions. As a member of Division 3, the compulsory member contributions you make on a pre-tax basis are included in your notional taxed contributions calculation for the year the contribution is made. Your notional taxed contributions (or NTCs) are grandfathered, which means your NTCs will be capped at the concessional contributions cap ($27,500 for the 2021/22 financial year and $25,000 for 2020/21), even if the NTC calculation produces a higher amount. This means you will not have to pay extra tax on these contributions if you breach the concessional contributions cap solely as a result of paying your compulsory member contributions in a different financial year.  For more information on NTCs, you can find the relevant fact sheet for your division and job type.

If you pay by transferring amounts from your voluntary accumulation accounts
If you pay your contributions by transferring existing amounts from your voluntary accumulation accounts (which include any voluntary contributions accounts you may have, or any Rollover or Other Employer accounts), the transfers themselves will not count towards your caps. This is because you’re not making or paying new contributions when you transfer amounts from the existing balance of those accounts – instead, you’re transferring amounts that are already within the super system, which you were taxed on when you first paid them into your super. If you make new voluntary contributions (pre-tax or post-tax) into your voluntary accumulation accounts, these will then count towards your contribution caps in the financial year in which you make them.

Some examples:

1. Jack is a Division 3 member who was stood down for 12 months. His Super Salary is $160,000 and he has member contributions owing of $8,000 post-tax, or $9,412 pre-tax. Jack decides to pay off the full amount during the 2021/22 financial year though a salary sacrifice arrangement with his employer via the Stand Down Member Contributions Salary Sacrifice Agreement form on The Terminal. Jack’s NTC calculation is 1.2 x (9% x Super Salary less after-tax compulsory member contributions), which is $17,280, calculated as 1.2 x (9% x Super Salary). The amount of member contributions he makes on a pre-tax basis does not impact the calculation, so the NTC remains at $17,280 even if $9,412 is paid in addition as pre-tax compulsory member contributions.

2. If Jack instead paid $9,412 worth of voluntary salary sacrifice contributions (and didn’t request these to be reclassified as compulsory member contributions), then Jack would go over the concessional cap, as his total concessional contributions would be NTC of $17,280, plus voluntary salary sacrifice contributions of $9,412 = $26,692 in total.

4. If Jack already had $8,000 in a voluntary account, made up of contributions from previous financial years, and he transferred this voluntary account to the offset account created for the compulsory member contributions debt, there would be no impact on his concessional contributions for the current financial year as a result of this transaction. Jack’s NTCs would remain at $17,280.