22 Jun Superannuation Guarantee will increase to 10% from 1 July 2021
Mandatory superannuation – called Superannuation Guarantee – 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.
Currently superannuation guarantee is calculated at 9.5% of ordinary earnings.
However, this increases to 10% for any wages or salaries paid, or payments made under a contract primarily for the supply of labour, from 1st July, 2021. 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 simple, 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 views superannuation calculation and payment as key compliance areas.
With single touch payroll and superannuation reporting through clearing houses, the ATO 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, please contact us for our expert assistance.