Change is coming to superannuation and its operation in business with an increase in the superannuation guarantee rate to 10.5% from 1 July 2022. Now is the time for all businesses to understand what is changing and what they need to do to remain compliant.
New SG Rate from 1 July 2022
As outlined in the Superannuation Guarantee (Administration)Act 1992 (Cth) and brought into effect with the 2021 Budget, superannuation guarantee (SG) rate increased from 9.5% to 10% from 1 July 2021. The rate is now in the incremental increase stage where the rate is increasing 0.5% per year with the rate to rise to 10.5% from 1 July 2022. The increases are currently set to cease when the superannuation rate reaches 12% on 1 July 2025.
Where staff are employed on a ‘salary plus super’ basis the change is a simple one to make, the business just has to go into the payroll system and change the superannuation % from 10.0% to 10.5% and communicate to the employee the change (this can be done as a separate letter or as part of the annual Confirmation of Employment process).
Removal of the $450 minimum threshold
Currently an employee must earn a minimum of $450 in a month before superannuation guarantee will apply. The changes to the rule will mean that superannuation will apply on all wages.
There are some differences for those under 18 years of age. Minors will only be eligible for the Superannuation Guarantee if they work more than 30 hours in any week.
Removal of the ‘work test’’ rule for voluntary contributions
Currently an employee aged 67-74 years can only make contributions to superannuation if they meet the work test. From 1 July 2022 individuals up to the age of 75 years will be able to contribute to superannuation without the work test element applying.
Here to help
HR Highlights are things to consider, implement and watch out for in your business. They are provided as general advice and you should seek further advice on your situation reaching out to ACAPMA Employment Professionals via email@example.com – it’s free for members.
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Elisha Radwanowski BCom (HRM &IR)