The long-awaited increase to superannuation guarantee is upon us with no further delays announced in the 2020-2021 Federal Budget. With the 1 July 2021 start date fast approaching, it is a timely reminder for employers to consider their obligations, in order to meet the new superannuation guarantee rate increase requirements and other related limits.
So, what are the key changes and what could they mean for you as an employer?
Changes relevant for employers
Superannuation guarantee
The superannuation guarantee rate will increase to 10% from 1 July 2021. The increase is the first of five 0.5% increases to 12% as illustrated by the below table:
| Year |
Rate |
| Year starting 1 July 2020 |
9.5% |
| Year starting 1 July 2021 |
10% |
| Year starting 1 July 2022 |
10.5% |
| Year starting 1 July 2023 |
11% |
| Year starting 1 July 2024 |
11.5% |
| Year starting 1 July 2025 and onwards |
12% |
The increase, effectively a 5.3% increase in superannuation expenses for the 2022 financial year, needs to be considered when preparing budgets and forecasts.
The increase will apply from the first pay run processed in July – even if it includes days worked in June.
Major accounting software providers such as MYOB and Xero are working towards ensuring the legislated increase flows seamlessly for the first pay run in July 2021. It is recommended you check your software and ensure any necessary updates are performed to ensure your software is ready, come 1 July.
Maximum super contribution base
The maximum super contributions base has increased also from $57,090 per quarter in the 2021 financial year to $58,920 from 1 July 2021. For employers with employees earning over $58,920 per quarter, only superannuation guarantee contributions are required to be made on the first $58,920 earned during the quarter (at 10%).
If you have any questions relating to calculating and paying your employees their super contributions, or any other business tax-related matters, please contact your trusted Ulton advisor or chat with our business services team on (07) 4154 0400.
Salary package arrangements
A salary package arrangement is generally negotiated and agreed upon between the employer and the employee.
Typically, a salary package includes: a base salary, superannuation and may also include other agreed entitlement (allowances, phones, iPads etc)
Now is the time to review your employees who are paid a salary package. Consideration and business decisions will need to be made:
- Will the business absorb the cost; or
- Change the package ratio? (A difficult conversation to have with an employee.)
Whatever the decision, be mindful that you may be setting a precedent for years to come.
Chat with our Human Resources Consultant, Christine Guy about possible options and advice, when you review your employees’ salary packages.
Changes relevant for those contributing to super
Concessional contribution cap $27,500
Coinciding with the increase to the superannuation guarantee rate, the concessional contribution cap has increased (with indexation) from $25,000 to $27,500 for the financial year ending 30 June 2022.
Those salary sacrificing or making voluntary concessional contributions are encouraged to review their periodic amount and seek professional advice to determine their arrangements for the 2022 financial year.
If you are salary sacrificing or making voluntary concessional contributions and have questions about how this may impact your 2022 financial year financial situation, please contact our Ulton Wealth Management team on (07) 4154 0425.
We are here to help
Whatever your questions or concerns about the upcoming changes to Super, your trusted Ulton advisor has you covered. Contact us via our online form or call (07) 4154 0400.
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