Did you know that another rise to superannuation is coming from 1st July? So, what does this change mean for businesses?
Making sure you’re on top of superannuation obligations is critical for any employer. If you fail to pay the correct amount of super to an employee, you can face serious consequences – including financial penalties and even potential jail time.
That’s why it is important to be aware of some upcoming changes to superannuation coming into effect from 1 July this year.
These changes include a modest increase to the super guaranteed rate and the removal of the superannuation minimum threshold.
Here’s what you need to know:
Super rate increase
Over the past two decades, the superannuation guarantee rate (the percentage of super your business is obligated to pay employees) has risen – somewhat modestly – each year.
While the rate is currently sitting at 10%, it will increase to 10.5% as of 1 July 2022. The rate will continue to rise incrementally over the next several years, reaching a peak of 12% in 2025.
For most employers, this year’s rate increase shouldn’t cause much of a headache. In many cases, the increased contribution changes should be applied automatically by your payroll platform.
However, it is still critical for employers to check that their payroll and accounting systems “have been updated for super payments made after 1 July 2022 to ensure they correctly calculate their employee’s super guarantee entitlement.”
Minimum threshold removed
Another key change coming into effect this July is the removal of the superannuation minimum threshold.
Currently, an employee must earn $450 or more per month to be eligible for the super guarantee to be paid by the employer. This means where your employee earns less than this amount, you are not legally obligated to make super contributions on their behalf.
From July 1, 2022, this threshold is being removed – meaning you will be obligated to make super contributions for all employees, regardless of how much they earn.
As with the rate increase, these changes should be updated automatically in your payroll platform. However, as with the rate increase, it is critical to confirm this to avoid accidental underpayments.
Akyra’s key takeaways
- Increased superannuation guarantee contribution from 10% to 10.5% from 1 July 2022
- Removal of $450 minimum threshold which means superannuation will be payable on any amount of wages earned.
While these changes shouldn’t require businesses to take too much action to update their super contribution obligations, it’s critical to make sure you are prepared to meet the new obligations and that all employees are receiving the right amount.
Checking you are paying the correct amount of super to your employees will ensure there are no accidental underpayments – and can help to avoid challenging situations down the track.
NEED MORE INFORMATION?
Akyra can help your business to assist and support all your questions and concerns related to superannuation obligations. Please contact Akyra on 07 3204 8830 or book a free 30-minute consultation for an obligation-free conversation.
Disclaimer – Reliance on Content
The material distributed is general information only. The information supplied is not intended to be legal or other professional advice, nor should it be relied upon as such. You should seek legal or professional advice in relation to your specific situation.
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