Superannuation Guarantee update

As of 1 July 2022, the “Superannuation Guarantee” will be increasing from the current 10% to 10.5%.
This means that by law, all employers will need to be paying 10.5% of eligible employees’ earnings from 1 July 2022 to their nominated superannuation fund.

Generally speaking, superannuation eligibility extends to full time, part time and casual employees who are over 18 years of age. More info on eligibility can be found on the ATO website. We note the current exemption referred to in the ATO link for employees being paid less than $450 is being removed from 1 July 2022.

Employee communication and budgeting
It will be important to identify and communicate this news to employees who are paid on a “superannuation inclusive package” as this may mean that their take-home income will reduce.
While it may seem welcome news to employees who are paid their superannuation on top of their income, employers will need to budget for this increased cost to the business.

Paying on time
As an employer, in order to ensure your superannuation processes are compliant with this change, it is important to have updated your payroll systems prior to the first pay run following 1 July 2022.

Need help?
If you need guidance on the how to update your processes or budget for the upcoming change, please feel free to contact us and we can advise the best way forward for you and your business.

Why is this happening?
The Federal Government put this increase in place to ensure Australians accumulate more superannuation for retirement and decrease the dependence on pensions. Last year the the superannuation guarantee rate increased from 9.5% to 10% and this .5% increase forms part of a greater scheme to gradually increase mandatory superannuation contributions to 12% by 1 July 2025. The increase dates can be found here.