Two essential changes in Super Guarantee will apply from 1 July 2022. As a business owner, it is important that you are on top of these. To help you out, we have created this easy guide to run down what they are, what this means and what you need to do.
Super Guarantee rate will increase from 10% to 10.5%
From 1 July 2022, all employers are required to start making Super Guarantee contributions at the new rate of 10.5% of an employer’s ordinary time earnings. Each financial year the Super Guarantee will continue to increase by 0.5% until it reaches 12% in 2025.
Superannuation is an essential part of the financial future of your employees, so the purpose of this contribution made by employers to the individual super funds, is to assist employees in growing their retirement savings.
The $450 per month eligibility threshold will be removed
Another big change that will benefit employees by 1 July 2022, especially low-income earners, is the removal of the $450 monthly minimum wage threshold. This means that regardless of how much your employees earn, they can be eligible for Super Guarantee contributions.
The only exception to this rule is that where an employee is under 18 years old, they still need to work more than 30 hours in any week to be eligible for the Super Guarantee.
What needs to be done as a business owner?
Make sure that your payroll and accounting software is updated from 1 July 2022 and that it is correctly calculating your employees' Super Guarantee entitlement at a 10.5% rate. This new rate is applied when wages are paid, not when work is performed. For instance, if the pay period includes part of June and part of July, but the payment date is in July 2022, the Super Guarantee rate that applies is 10.5% even though part of the wages were earned in the 2021 financial year.
Ensure that the $450 threshold has been removed for all employees. By removing the $450 threshold, some or all your employees will get paid Super Guarantee for the first time. If that is the case, you will need to provide them with a Standard Choice form or you can send a request to the ATO for the employees’ stapled super fund details. This is an existing super account linked to an individual employee that follows them when they change jobs.
There are two important changes in Super Guarantee from 1 July 2022. The SG percentage will increase from 10% to 10.5% and the $450 monthly threshold will be removed. If you would like to receive some information on this topic, contact Link and we can assist you.