Super guarantee is the minimum amount of super an employer must pay each quarter to each eligible employee.
Typically, employees who earn $450 or more (before tax) in a calendar month, are eligible for super (find out more here). The super guarantee is money paid into an employee’s complying super fund by the employer, which goes towards the employee’s retirement.
The super guarantee contribution rate is currently 9.5% and is paid on ordinary time earnings. Find out more on what is considered ordinary times earnings on Beam’s blog here.
What is the super guarantee percentage increase?
The start of the new financial year; 1 July 2021 will see the first of the staggered increases of the super guarantee contribution rate since FY 2013/14.
For the FY 2013/14, the super guarantee contribution rate increased from 9.25% to 9.5%.
Effective 1 July 2021, the super guarantee contribution rate will increase from 9.5% to 10% with plans for it to continue increasing in increments to 12% by 1 July 2025.
The increase to 10% and following increases are legislative, and unless the Superannuation Guarantee (Administration) Act 1992 is changed, the increase will be required.
To see the full list of rates, visit the ATO website.
What does this mean for you?
It is recommended you start having conversations within your team to understand the impact it will have on pay. This rings especially true for those employees who are under a total remuneration package or for those employers that pay additional employer superannuation contributions above the current super guarantee contribution rate.
Making the necessary updates
The most important step to make sure your business is compliant is by making changes within your payroll software for FY 2021/22.
If you are a Definitiv or Proactiv Payroll customer, please hold out on contacting our Support team just yet. We will be in touch in the following months with further information and guidance on what needs to be done within Definitiv.
Information provided in this article is general information, not legal advice and should not be relied upon as such. Definitiv does not accept liability for any loss or damage arising from reliance on the content of this article.