Keeping up with superannuation compliance can feel like a moving target, especially when it comes to technical requirements like the Actual Deferral Percentage (ADP) and Actual Contribution Percentage (ACP) tests. In 2025, with new regulatory updates and ongoing scrutiny from the ATO, understanding these tests is essential for any Australian employer offering salary sacrifice or after-tax contribution options. Let’s break down what ADP and ACP tests are, why they matter, and how to ensure your business stays on the right side of the law this year.
What Are the ADP and ACP Tests?
The ADP and ACP tests are anti-discrimination measures designed to ensure that employer-sponsored superannuation plans—particularly those allowing salary sacrifice and after-tax employee contributions—do not disproportionately benefit higher-income or key employees. These tests originated in the US but have been adapted for Australian superannuation compliance, especially for large corporate funds and non-standard plans.
- Actual Deferral Percentage (ADP) Test: Assesses the average salary-deferral percentage (pre-tax contributions) of highly compensated employees compared to non-highly compensated employees.
- Actual Contribution Percentage (ACP) Test: Evaluates after-tax (voluntary) contributions and employer matching, ensuring parity between employee groups.
For most Australians in MySuper or standard retail/industry funds, these tests are handled at the fund level. However, for tailored corporate plans, especially those with flexible salary sacrifice options, employers and trustees must actively monitor compliance.
2025 Policy Updates: What’s Changed?
Superannuation compliance in Australia continues to evolve, with the ATO increasing its focus on ensuring fair treatment across all levels of employment. In 2025, several key changes and reminders are front of mind for employers:
- Expanded ATO Audits: The ATO has flagged increased audit activity on employer-sponsored plans, especially those offering generous salary sacrifice or matching arrangements.
- Updated Employee Thresholds: The definition of ‘key employee’ and salary thresholds have been indexed for the 2024/25 financial year, affecting who is included in ADP/ACP calculations.
- Data Reporting Requirements: Employers must now provide more granular data to super funds and the ATO, making any discrepancies in contribution patterns easier to spot.
Failing an ADP or ACP test doesn’t just mean a slap on the wrist—it can result in costly corrective distributions, lost tax concessions, and reputational risk for employers.
How Can Employers Prepare and Stay Compliant?
With regulatory attention sharpening, proactive employers are taking a few key steps in 2025:
- Conduct Regular Contribution Testing: Use payroll and super fund data to run ADP/ACP calculations at least annually, ideally before the end of the financial year.
- Communicate Plan Features Clearly: Make sure all employees understand their options for salary sacrifice and after-tax contributions, and that no group is unfairly advantaged.
- Leverage Tech Tools: Payroll software and super fund portals now often include automated ADP/ACP compliance features—take advantage of these to streamline reporting.
- Stay Informed on Policy Shifts: Monitor updates from the ATO and your super fund provider regarding any rule changes or new testing requirements.
For example, a mid-sized tech company in Sydney offering a matched salary sacrifice plan recently avoided a compliance headache by running mid-year tests and identifying that their highly paid engineers were contributing far more than the rest of the workforce. By capping matching contributions and increasing communication, they ensured their plan passed the 2025 ADP/ACP thresholds.
Why These Tests Matter for the Future of Super
ADP and ACP testing isn’t just about ticking a compliance box—it’s about ensuring Australia’s superannuation system remains equitable and robust. As salary sacrifice and flexible benefit arrangements become more common, these tests help prevent wealthier employees from gaining outsized tax advantages.
For employers, getting ahead of ADP/ACP compliance isn’t just smart risk management—it’s a sign of a fair and future-proof employee benefits program.
