Superannuation payments will increase to 10% from 1 July 2021, meaning changes to your payroll and the amount of super you’re expected to pay your workers.
The super guarantee (SG) rate has been set at 9.5% since 1 July 2014. From 1 July 2021, it increases to 10%, and has been legislated to rise incrementally each year until it reaches 12% in 2025.
If you manage a business, or the payment of staff, this change will impact the amount of super you pay your workers.
Super guarantee rate rises to 10%
From 1 July 2021 the super guarantee (SG) is 10% of a worker's ordinary time earnings (OTE). This is a rise of 0.5% (from 9.5%). If you manage a team or payroll you’ll need to check you’re paying eligible workers at least 10% super.
The rise is the start of a 4-year plan to increase the SG to 12% by 2025 so that working Australians can be better supported financially in retirement.
What the rise in SG means for your business
The key change to your business is that you now need to pay workers 10% super. This will impact your payroll. You can still pay super via a clearing house if that’s your preferred method.
Advise your workers of this change and make sure they check their payslips and super contributions. If your team isn’t sure where their super is paid, they can log into my Gov and go to the ATO section. Any changes in the super system can be a good time to remind your employees to check their super accounts and balances. Super is an ongoing part of their financial future.
If you have any concerns or questions relating to the rise to 10% SG and how it may financially affect your business operations, consider speaking to your accountant.
AustralianSuper’s National Manager Business Partnerships, John Zanetti says: ‘The rise to 10% SG is a huge help to working Australians who will now benefit from increased retirement savings. However, it may be an additional financial commitment for some businesses.
‘We would suggest business owners plan accordingly for the new commitment and if required, seek advice from their preferred business partner to help guide their business and ultimately its employees.’
For an employee earning $60,000 after tax, super payments would be rise by $300 a year. From $5700 to $6000 under 10% SG.
When to start paying the new SG rate
The new rate comes into effect from 1 July 2021. You may have a payroll cycle that that crosses this period. To work out the super owed the ATO advises it’s the date of the salary payment which determines the rate of SG payable - not the date the work was completed. So if a worker is paid in July for work completed in June, then the 10% SG rate applies.
To find out more about what work the new SG rate applies to visit ATO: How much super to pay.
Choose the right super fund
With 10% of your team’s wages or salary contributed to their super for retirement, it’s important they choose a good fund with strong, long-term investment performance and low fees. Comparing funds can be a good place to start.