25 May NO THRESHOLD & MANDATORY SUPERANNUTION GOES UP INCREASE TO 10.5% OF ORDINARY EARNINGS
Mandatory superannuation – called Superannuation Guarantee (SG) – is well established in Australia.
It is calculated by employers based on an employee’s (or in certain circumstances, a contractor’s) ordinary earnings, and paid regularly by the employer to the employee’s superannuation fund.
From 1 July 2022, two important Super Guarantee (SG) changes will apply to your business. These are:
- the rate of Superannuation Guarantee is increasing from 10% to 10.5%
- the $450 per month eligibility threshold for when SG is paid is being removed.
No Threshold from 1 July 2022. Employees can be eligible for Superannuation Guarantee, regardless of how much they earn. The removal of the $450 threshold means you may have to pay Superannuation Guarantee for the first time for some or all of your employees. They will need to complete a Standard Choice Form.
Employers need to make Superannuation Guarantee contributions at the new rate of 10.5% for any wages or salaries paid or payments made under a contract primarily for the supply of labour from 1st July 2022. Most payroll software companies will automatically update their software to the higher rate, so any employer using a main steam product should have little to do – other than be aware of the higher charge rate.
While it all sounds very simply, working out exactly what makes up ordinary earnings and whether a contract is caught by the superannuation guarantee legislation, can be particularly tricky.
The ATO see superannuation calculation and payment as key compliance areas.
With single touch payroll and superannuation reporting through clearing houses, they have access to the data they need to rapidly detect anomalies and shortfalls, and to initiate compliance action.
If you have any doubts about your mandatory superannuation calculation, or simply have not looked at it in a while, and wish to ensure you are still compliant, please contact us for our expert assistance.