Employers should be aware of some key changes to superannuation laws that will impact the calculation of employee superannuation entitlements.
Superannuation Guarantee Rate Increase to 10%
Employers in Australia are required by law to make regular contributions to their employee’s superannuation fund. The legislated Superannuation Guarantee (SG) rate is currently set at 9.5% of ordinary time earnings. The first increase to the SG rate will occur on 1 July 2021 and will see the contribution rate that employers are required to pay increase from 9.5% to 10%. This will then be followed by incremental half percentage point (0.5%) increases each year until the rate reaches 12 per cent on 1 July 2025.
Employer’s will need to adjust their payroll systems to ensure the contribution rate adjustment is reflected in remuneration arrangements for eligible employees. Failure to contribute the required amount to employee superannuation funds prior to the quarterly due dates could see penalties from the Australian Tax Office (ATO) for late or inaccurate payments.
Removal of the $450 Minimum Monthly Earnings Threshold
Included in the recent 2021 Federal Budget is the proposal to remove the $450 monthly minimum earning threshold.
Currently, employers do not have to pay superannuation to employees who earn less than $450 per month. This change, if legislated, will likely commence from 1 July 2022 and will require employees to adjust payroll systems and SG payments accordingly.
For more information about your employee superannuation obligations contact your Advisor at 360Private.