Superannuation payments will increase to 10.5% from 1 July 2022. That means changes to your payroll and the amount of super you’re expected to pay your workers.
The super guarantee (SG) rate has been 10% since 1 July 2021. From 1 July 2022, it increases to 10.5% 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, these changes will impact the amount of super you pay your workers.
Super guarantee rate rises to 10.5%
From 1 July 2022, the super guarantee (SG) is 10.5% of a worker's ordinary time earnings (OTE). This is a rise of 0.5% (from 10%). If you manage a team or payroll, you’ll need to check you’re paying eligible workers at least 10.5% super.
The rise is part of a plan to increase the SG to 12% by 2025. This aims to better support working Australians financially in retirement.
What the rise in SG means for your business
The key change to your business is you’ll need to pay workers 10.5% 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 myGov 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 questions relating to the rise in the SG and how it may financially affect your business over the coming years, consider speaking to your accountant.
AustralianSuper’s National Manager Business Partnerships, John Zanetti, says: ‘The rise 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, super payments would rise by $300 a year. From $6,000 to $6,300 under 10.5% SG.
Paying the new SG rate
The new rate comes into effect from 1 July 2022. You may have a payroll cycle that crosses this period. To work out the super owed, the ATO advises it’s the date of the salary payment that determines the rate of SG payable. Not the date the work was completed. So if a worker is paid in July 2022 for work completed in June 2022, then the 10.5% 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 10.5% of employee wages or salary going to super for retirement, it’s important they choose a fund with strong, long-term investment performance and low fees. Comparing funds can be a good place to start.