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Superannuation for councillors

1 July 2024

This info sheet reflects Brighter Super’s understanding of provisions of the Local Government Act 2009 and tax law. It does not apply to Brisbane City Council councillors or any other Brighter Super member.

Do councils pay superannuation for their councillors?

Councillors are not always regarded as employees for taxation and superannuation purposes. This means a council is not always obliged to pay superannuation contributions for councillors.

However, where a council resolves unanimously to be an ‘eligible local governing body’ under section 446-5 of the Taxation Administration Act 1953, councillors are regarded as employees and superannuation guarantee contributions (11.5% of ordinary time earnings from 1 July 2024) must be paid as a minimum. If a council has not resolved to be an eligible local governing body, it is up to the council to decide whether it will make super contributions for the councillor. A maximum contribution rate of 12% applies (see section 226 of the Local Government Act 2009 for details).

Councillors may also enter into agreements with councils to sacrifice some of their remuneration into super, with these contributions treated the same way as employer contributions. This means they are taxed at 15% and count toward the concessional contributions cap.

Tax deduction for personal contributions

Everyone under age 67 (and those aged 67 to 74 who satisfy the work test) can claim a tax deduction for their personal contributions. Personal contributions are made from after-tax money and can be paid as a lump sum or as a regular contribution. When claimed as a tax deduction they will count towards the concessional contributions cap and will be taxed at 15%. For more information see our Tax deduction for personal contributions information sheet.

Salary sacrifice arrangements

Under section 226(4) of the Local Government Act 2009, councillors can salary sacrifice part of their remuneration in pre-tax superannuation contributions. These salary sacrifice contributions are treated as employer contributions from the council and count to your concessional contribution cap of $30,000 for the 2024/25 financial year.

For a salary sacrifice arrangement to be effective for taxation purposes, it must take the form of a written agreement that relates only to prospective earnings. If the agreement attempts to include income earned prior to the date of the agreement, it will be invalid, and the income will be taxed as ordinary earnings.

Seek professional help

We recommend councils seek professional help when determining the best strategies for superannuation and councillors.

Any questions?

Our team of Relationship Managers are available to assist with any questions relating to council superannuation. They can also meet with Councillors to assist with all aspects of superannuation. Please call 1800 444 396 to arrange a meeting.

LGIAsuper Trustee (ABN 94 085 088 484) (AFSL 230511) (the Trustee) as trustee for LGIAsuper (ABN 23 053 121 564) (RSE R1000160) (the Fund) trading as Brighter Super. Brighter Super products are issued by the Trustee on behalf of the Fund. Brighter Super may refer to the Trustee or LGIAsuper as the context may be.

This info sheet provides general information only and does not take into account your individual objectives, financial situation or needs. As such, you should consider whether it is appropriate in light of your own objectives, financial situation and needs prior to making any decision. You should consult a licensed financial advisor if you require advice which does take into account your personal financial circumstances. You should also obtain and consider the Product Disclosure Statement (PDS) before making any decision to acquire any products. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the PDSs and TMDs at brightersuper.com.au/governance.