Employers be aware: Super Guarantee rate increases to 10% commencing 1 July 2021
On 1 July 2021, the Superannuation Guarantee rate will rise from 9.5% to 10% – the first rise since 2014. It will then steadily increase each year until it reaches 12% on 1 July 2025.
What are the changes?
The compulsory Superannuation Guarantee contribution rate will increase on 1 July 2021 to 10% (up from the current rate of 9.5%) for all eligible employees.
Under the recent Federal Budget, the Government announced its intention to remove the $450 threshold from 1 July 2022 to benefit low-income earners which we advise that this measure has not yet been legislated.
How will the SGC rate change impact you the employer?
Employers need to ensure their payroll systems are updated so that all eligible employees are receiving contributions at the increased rate of 10% from 1 July 2021.
Please note that section 19 of Superannuation Guarantee Admin Act 1992 states the superannuation to be calculated on the date the wages are paid by the employer to the employee.
From the our experience when the super rate increased in the past and the ATO's advice this means:
For any wages paid before 30 June 2021 the 9.5% superannuation rate should be used regardless the period the wages is related to
For any wages paid after 1 July 2021 10% superannuation rate should be used.
Changes with Single Touch Payroll
If you have an up-to-date payroll system which complies with Single Touch Payroll (STP) these changes should be relatively simple to comply with as new employees engaged on or after 1 July 2021 will automatically be registered under these new changes.
Employers will need to ensure these changes are promptly implemented in order to avoid penalties for underpayments and/or late payments.
Superannuation Packages to be reviewed
Superannuation salary packaging arrangements will also need to be reviewed – employers should ensure that the calculations are correct and the superannuation rate increase flows through.
Need Help?
If you would like help with the 2021 superannuation guarantee changes, or another other superannuation or employee payment obligations, please contact us and we will be able to assist.