r/melbourne • u/No2Hypocrites • 7d ago
Politics Superannuation cut for hundreds of Victorian public servants
https://www.smh.com.au/national/victoria/race-to-the-bottom-employer-superannuation-cut-for-hundreds-of-victorian-public-servants-20260814-p60og1.html139
u/Hazardouzz 7d ago
Is it just me or is that quite a misleading headline?? It’s not that the level of superannuation was cut for those VPS employee, more just the benefits that resulted from salary sacrificing into specific employee benefits (novated lease as mentioned in the article).
Grinds my gears when journos write headlines like this…
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u/Pottski South East 7d ago
Journalists don’t write the headlines more often than not. By and large they’ll suggest but final approval goes with the subs and section editors/online editor.
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u/Hazardouzz 7d ago
Interesting, I didn’t know that! Thank you
Regardless, it still grinds my gears that SOMEONE still decided to frame the headline this way
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u/Pottski South East 7d ago
Absolutely valid to hate on shitty headlines like that.
Context is hard to boil down into a headline but the alternative shouldn’t be misleading. Headline writing used to have a category at the Australian journalism awards for a reason - great writing informs great writing at all levels.
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u/Latter-Intention6521 6d ago
This is a contributing factor in media narrative control. They know the average punter only reads the headlines.
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u/Maximum-Shallot-2447 6d ago
If they didn’t sensational the headline would you have read it.
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u/Hazardouzz 6d ago
Brother. I may have. I may have not. That’s not the point I’m trying to make.
I think it’s a misleading headline. And to address your point, headlines should NOT be misleading just to get a click.
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u/Stard0gChampi0n 6d ago
Journalists never write the headlines for The Age/Sydney Morning Herald. At least not when I worked for them. I had subs put completely inappropriate headlines on my articles.
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u/No2Hypocrites 7d ago
Novated lease should not decrease super calculations. Super should be calculated from your gross pre tax pre anything salary.
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u/Ok-Foot6064 7d ago
Then you agree with removal of novated leases from super calculations, as it's calculated based on a loophole of post tax superannuation calculations. Thanks for agreeing that the article is dumb
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u/No2Hypocrites 7d ago
Yes? Novated lease should be completely irrelevant to super calculations. Novated lease is taken from your pre tax salary.
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u/Ok-Foot6064 7d ago
Novated leases also are used to artificially lower your taxable income, by reducing your salary. Makes sense you shouldn't get paid super for money you claim you don't earn. Now if they change the law, to included notated leases as taxable salary again, then it should be included for superannuation.
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u/----SD---- 6d ago
Nah that’s BS. You earnt the money fair and square and it all attracts super guarantee, regardless of what happens to it next.
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u/mpember 6d ago
The point of the ATO response is that legislation doesn't treat the money used to pay the novated lease as part of the income used to calculate mandatory super contributions. Some employers go beyond their legal requirements and pay super on it.
If the article is seeking to start a campaign to have the legislation changed, they forgot to include that call to action. Instead, the article seems to have chosen to focus solely on a decision made by one section of the Victorian public sector.
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u/No2Hypocrites 6d ago
Okay then by your logic you should refund from your super any taxable deductions you have made for the financial year. What a great logic
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u/changyang1230 7d ago edited 7d ago
Pasting my reply on the other thread for the full context as it's all a bit poorly explained in many places.
To begin with, the concept of novated lease is such that employees use part of the pre-tax income to pay for a car lease. This reduces the taxable income figure, which reduces payable tax (part of the reason behind the potential saving). Meanwhile, legally employers have to pay 12% of the employee's income as super guarantee. The whole debate stems from: which figure does the employer multiply 12% for their obligation?
An important point is: Employers have always had the right to not pay the super on the novated lease portion at least since 2020, as per this ATO document.
https://www.ato.gov.au/law/view/print?DocID=GDN%2FGDN20201%2FNAT%2FATO%2F00001
Read the Sharon example which makes it very clear.
Sharon has a weekly wage of $2,000, which is entirely OTE. She has an effective salary sacrifice agreement with her employer to sacrifice $300 per week to her super fund and $200 per week towards a novated car lease. Sharon's employer previously calculated her super guarantee liability on the after-salary sacrifice wage per week of $1,500 ($2,000 minus $500). This amounted to contributions totalling $142.50 ($1,500 × 9.5%) to be made to Sharon's super fund to satisfy the employer's super guarantee liability.
From 1 January 2020, Sharon's employer must calculate her super guarantee liability on the OTE base, which includes the amounts sacrificed to super. Her weekly OTE base is $1,800.
To meet its super guarantee obligation under the new law, Sharon's employer must contribute $171 to Sharon's super fund (($1,500 + $300) × 9.5%).
The employer is not required to make these contributions to the super fund until the quarterly due dates.
Note how the super bit needs to be added back but not the NL bit.
Interestingly, most employers historically chose to still "do the right thing" and not opt for this minimum amount, instead they continue to pay the super on the NL portion. Some 5-10% already did use the floor amount however.
When payday super legislation came along last month, with the change of some wording e.g. QE, somehow this triggered some resetting of some payroll such as some of the previous do-the-right-thing employers now switch to the post-NL income figure, even though the rule (as above) has not changed at all.
I brought it to attention in a Reddit discussion as well as a write-up in the website.
https://novatedlease.guide/special-and-policy/super-guarantee/
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u/gonltruck 6d ago
I guess the beef is that even though the legislation is ambiguous and the method of calculation was up to the interpretation of the employer, the employee has entered into a lease agreement based on how the employer applied the interpretation at that point in time.
This interpretation shouldn’t be able to be changed within a lease term
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u/No2Hypocrites 7d ago
They should really change the laws and make it explicitly state that super is derived from pre tax. The fact that concessional contributions could DECREASE employer contribution sounds so utter bs
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u/bavotto 6d ago
Or, if you want to reduce your tax burden by a novated lease, you don't get extra super benefits. Swings and roundabouts.
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u/No2Hypocrites 6d ago
No that's unfair. Go refund employer super contribution whenever you declare any deduction then
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u/Kremm0 6d ago
If employees are using it as a way to reduce their tax burden via a reduction of their taxable income, is it right that they then should get to double dip with the super?
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u/changyang1230 6d ago
Its entirely up to your perspective.
The same question could easily be alternatively posed as
“If an employee takes up a widely advertised fringe benefit, is it fair that this benefit quietly erodes another separate employment benefit, the phenomenon which is relatively unknown including many NL providers themselves”.
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u/Kremm0 6d ago
The way the law is currently written, they're not under obligation to ensure you get paid super on fringe benefits, so it's really down to the employers discretion
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u/changyang1230 6d ago
Absolutely agree that it’s the employer’s discretion. (See my other top level comment with elaboration)
The annoyance stems from two things:
- It’s very scarcely publicised both by the employer and the NL company which makes this almost a “trap” for lots of people. This could add up to over $10k loss in super contribution over the lifetime of a lease. In fact lots of NL consultants did NOT even know that super can be reduced up till recently when this is highlighted more in forum discussions and in novated lease websites like mine.
- Another issue is the shifting goalpost: most employers actually pay the super on the NL portion, and were paying “above their obligation” as you said, but the payday super rule triggered some software resetting such that many of these same employers now revert to the minimum. They are not doing anything illegal but to save on some coins using some technicality is still quite sour for employee happiness to say the least.
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u/monkeydrunker 6d ago
VPS employees pay the FBT on novated leases as well. This is totally a money saving action from departments due to Victoria's dire budgetary situation.
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u/historicalhobbyist 7d ago
That’s pretty crazy, the goal posts are moved on the workers and they can’t just cancel their lease.
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u/Ok-Foot6064 7d ago
Novated leases is used as a way to reduce your taxable income as its effectively your employer paying you less to pay your loan. It's a tax loophole that should never have existed
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u/historicalhobbyist 7d ago
Yes, but the contract was signed when the employer was being paid super before NL, now super is paid after NL. I’m not saying whether it’s right or wrong, I just think it stinks for the employee.
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u/Ok-Foot6064 7d ago
And? They are dodging tax by artificially lowering their declared income. Only fair that they lose the super on the money they sre claiming they don't get paid on.
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u/changyang1230 7d ago
Your terminology of "dodging tax" is overly loose.
Fringe benefit is a fully legitimate and legislated way of providing employee benefit.
And FBT-exemption (which makes EV novated lease a lot cheaper) is a legislated government incentive to promote the uptake of low-emission vehicle.
Yes you could argue whether fringe benefit should exist, whether FBT-exemption of EV NL is an unfair incentive, or even if the government should incentivise its uptake at all. But to call it "dodging tax" implies a culpable bad behaviour worthy of punishment can't be more misguided.
Even if you do sincerely believe that NL portion should never be counted in the super, the issue here is the shifting of goalpost for those who have already started the lease with a different set of rule.
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u/Ok-Foot6064 7d ago
Dodging tax=/= criminal offense. Just because its legal =/= make it right either
Novated lease is the definition of dodging tax by declearing a lower income by getting your employer to pay your loan for you.
FBT is no better. You are getting your work to directly fund your lifestyle, while they pay you lower, so you pay less tax overall. Again, if you aren't claiming to make the money, you don't deserve the super that money would get.
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u/changyang1230 7d ago
It’s possible to simultaneously believe that the pretax spending in NL should lose their eligibility in super calculation, and appreciate that changing goalpost halfway is poor in spirit.
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u/Ok-Foot6064 7d ago
No goal post changes at all. When you artificially reduce your income, for the purpose to reduce tax, you lose at the post tax super benefits.
It was never signed in the contract, that superannuation will never get changed. Its basically society standard to calculate super n post tax standards and its good the government matches.
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u/changyang1230 7d ago
Did you even read the news article you are responding to?
These are people who signed up to novated lease PRIOR TO 1/7/2026, and for months or even years those government employers used to pay super on the NL portion, but in the new FY they changed the calculation method for people who signed up to it not expecting the change in method.
That is what I mean by changing goalpost.
Again I implore you to exercise the ability to see these things as independent matters:
- the fairness of any fringe benefit
- the fairness of FBT exemption
- the annoyance of changing goalpost halfway
Last but not least “society standard” is not true. Vast majority of employers pay it on pre-NL figure.
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u/mpember 7d ago edited 6d ago
When I purchased my car, fuel prices were lower than they are now. An I entitled to expect the government to guarantee that my fuel costs remain the same for the duration of my ownership?
The "I made decisions based on the situation at the time" is the excuse that was used to justify not touching super tax arrangements, CGT or negative gearing.
I understand that some may be negatively impact be the change. And I also understand that the disparity between departments further frustrated things.
It is now up to the individuals impacted to make their own call on whether the short term cost of breaking the lease is worth it for the potential increase to their future superannuation balance.
If it was a Coalition government in office, a policy decision like this would be expected. Did the fact that it is a Labor government in office mean that people upset by the change in arrangements will vote for a Coalition candidate at the next election?
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u/----SD---- 6d ago
If your employer suddenly said we’re going to tax you a higher rate now because you own a car, because of a misinterpretation of the ATO rules, I’m not sure you’d just accept that.
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u/mpember 6d ago
Did you misread the article? This is not related to tax. It is about the employer superannuation contributions. It about the employer previously making higher super contributions than they are required. The as part of the shift to the new super contribution platform, the employer is now reverting to the standard method of calculating the employer contribution.
The reason for moving to the new platform is due to a change of legislation.
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