Super Guarantee is set to rise in July, are you ready?
The superannuation guarantee statutory rate has remained at 9.5% since July 2014. However, plans have been in place for some years now, to increase the rate to 12% incrementally.
In July 2021, the rate will rise to 10%. From then on, the rate will increase by 0.5% each year until July 2025 when it will reach the legislated 12%.
Prior to the delayed 2020 federal budget, there was discussion about the possibility of deferring the rate rise because of COVID-19. However, the rate rise had been postponed from 2018 to 2021, so the plans to start increasing the rate each year remain in place – at least for now.
Prepare Now for the July Rate Rise
Review your current superannuation costs for all employees, both hourly and salaried.
Review any salary packaging arrangements. Is the agreement inclusive of superannuation or is super paid on top of the agreed salary?
For salary packages inclusive of super, you will need to check the contract's wording to make sure you apply the changes correctly. This change may also impact annualised salary arrangements.
Calculate your revised payroll costs from July, showing the current wages and superannuation expense compared to the new rate from July 2021. Highlight the increased amount per month or quarter, so you know precisely what the impact will be.
Discuss the super rate increase with your employees now. Let them know that this is the first year since 2014 that the rate has risen and that unless the law changes, there will be an increase of 0.5% each year from now until July 2025 when the statutory rate will reach 12%.
Remember – short payment or late payment of super can incur hefty penalties – plan now for higher payroll expenses from July, so you don't get caught short.
If you’d like help reviewing payroll costs and employee agreements, talk to us now, and we'll make sure you have accurate reports to make planning for the rate rise easy. Getting organised now means that you'll be well prepared for your business's increased costs when the first payment is due later this year.
- BOMA