The Superannuation guarantee rate is set to rise from 9.5% to 10% effective from 1st July 2021 and will continue to increase yearly until July2025 as per below table
| Period | Superannuation Guarantee (%) |
|---|---|
| 1 July 2020 – 30 June 2021 | 9.5% |
| 1 July 2021 – 30 June 2022 | 10% |
| 1 July 2022 – 30 June 2023 | 10.5% |
| 1 July 2023 – 30 June 2024 | 11% |
| 1 July 2024 – 30 June 2025 | 11.5% |
| 1 July 2025 – 30 June 2026 | 12% |
In order to prepare your business for the increase to minimum superannuation guarantee payments from 1st July2021, we advise your business to do the following-:
Adjust Payroll System
As an employer, it is our responsibility to adjust or make sure payroll system is adjusted correctly to pay 10% super guarantee (SG) on employees’ wages. All wages paid in July2021 (including work performed in June or previous period will attract the new super guarantee rate of 10%. The failure to pay correct super may result in superannuation guarantee charge (SGC, it is a ATO Penalty)
Review Employee Contract
It is important to review your employee’s contract to determine whether you are required to make the additional increase payment or whether employment contract adequately covers this increase of SG rate. For example, if a contract of employment states that an employee is paid on a total remuneration basis which includes statutory superannuation under any legislation at any point in time. In this case, then it may be possible for an employer to reduce an employee’s base rate of pay to effectively offset the increase in superannuation such that an employee’s total remuneration remains unchanged. However, if employment contract is not done on total remuneration basis (i.e. inc Super) then the business is obliged to absorb the increased cost of superannuation guarantee rate.
In situation, where employee is paid at minimum wage rate, then business is again obliged for increased superannuation rate.
Businesses are strongly encouraged to actively engage with and communicate with employees, so they are aware and understand the approach in which the business intends to take.
