In addition to planning for the expected statutory super rate rise to 10.5%, some employers need to prepare for a significant change from July 2022.

Superannuation guarantee increase to 10.5%

The Superannuation Guarantee (SG) rate will rise from 10% to 10.5% on 1 July 2022 and will continue to increase by 0.5% each year until it reaches 12% on 1 July 2025.

If you have employees, what this will mean depends on your employment agreements. If the employment agreement states the employee is paid on a ‘total remuneration’ basis (base plus SG and any other allowances), then their take home pay might be reduced by 0.5%. That is, a greater percentage of their total remuneration will be directed to their superannuation fund. For employees paid a rate plus superannuation, then their take home pay will remain the same and the 0.5% increase will be added to their SG payments.

 

Removal of the $450 Monthly Earnings Threshold

The $450 per month eligibility threshold has been removed for most workers.

This means employers will need to pay the superannuation guarantee contribution (SGC) on all ordinary earnings. Particularly if your business relies on a large pool of casual workers who earn less than $450 per month, you’ll notice the extra cost when it comes to paying SGC for the September quarter.

There are some exceptions to the rule – employees under 18 and domestic workers need to work more than 30 hours per week and earn more than $450 per month. Contractors deemed employees for superannuation contributions must earn more than $450 per month. There are different rules for international and temporary workers.

 

Single Touch Payroll Super Reporting

All your payroll details are reported to the ATO through STP. This includes super amounts owed to employees. Late payment and interest penalties are expensive, so this is one employer obligation you don’t want to miss!

 

Get Ready for Increased Payroll Costs

Be proactive and start costing your payroll now to budget for the increased payroll costs. You can also let your employees know about the changes coming to their super, so they know about their entitlements.

 

If you’d like a review of your payroll systems and costs, talk to us today. We’ll help you plan for the impacts of the increased super expenses on your business.