Important Change for Employers: SG Threshold to Change + Superannuation Guarantee increasing to 10.5% on 1 July 2022
A Quick Overview
The Superannuation Guarantee (SG) is scheduled to increase to 10.5% from 1 July 2022. Along with this, employers must pay super guarantee on all ordinary earnings paid to an employee including the first $450. Previously it was not necessary for employers to pay superannuation on the first $450 per month.
If you have employees, you need to be ready for this legislated increase.
What is Superannuation Guarantee?
The Superannuation Guarantee is the minimum super an employer must pay to their employees super fund. The current SG percentage rate is 10% of employees Ordinary Time Earnings, but this is changing.
Ordinary Time Earnings or OTE, is generally what your employees earn for their ordinary hours of work. It includes commission, loadings and allowances but does not include overtime or reimbursements.
What is changing?
- The Superannuation Guarantee rate is increasing to 10.5% from 1 July 2022. It will continue to increase by half a percent each year until it reaches 12% on 1 July 2025.
- The $450 SG Threshold is being removed
What do you need to do?
- Firstly, you should speak to your payroll software provider to make sure they are on top of this rate change. Your accountant or bookkeeper may also be able to help.
- This is also a good opportunity to do some housekeeping to ensure your super obligations have been met (including super payments and calculations).
Why is this important?
As an employer it’s important to ensure you pay super at the new minimum rate. There are financial penalties applied for not meeting your SG obligations.
The Superannuation Guarantee Charge (SGC) is the penalty charged when employers don’t pay :
- the required super guarantee contributions for eligible employees,
- super contributions by the payment cut off date or
- super to each employee’s chosen super fund.
It is important to note, that if you don’t pay these obligations by the due date then you become illegible to include the superannuation for the unpaid period as a tax deduction.
Got a question?
Get in touch with us if you need any help or have any questions.