From 1 July 2021, the superannuation guarantee statutory rate will rise from 9.50% to 10%. From then on, the rate will increase by 0.50% each year until 1 July 2025 when it will reach the legislated 12%.
For all of our clients, we will ensure that your payruns are compliant. However, there is some homework to do up-front to ensure this goes smoothly...
What this means for Employees
If your employment contract specifies a total remuneration package inclusive of superannuation, the base salary may be adjusted down for the increase in super guarantee statutory rate. This means the take home pay will be reduced from 1 July 2021.
If you are under an enterprise agreement or minimum pay standards, there will be no change to your take home pay as a result of the super rate increase.
Regardless of your employment arrangement, the changes will result in an increase to the amounts contributed to your superannuation fund.
What this means for Employers
Review any salary packaging arrangements, and whether these are inclusive of superannuation or if super is paid on top of an agreed salary. Seek legal advice if necessary.
For salary packages that are inclusive of super, you will need to check the employment contract's wording to make sure the changes are applied correctly.
To determine the impact of these changes to your business, compare your current and revised payroll costs for all employees.
It is important to discuss the super rate increase with your employees now and clearly explain how the changes will affect them.
Make sure the payroll systems are updated from 1 July 2021. Base salaries may need to be adjusted for employees on a salary package arrangement.
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 would like help reviewing payroll costs and payroll system settings, talk to us now. We will make sure you have accurate reports to make planning for the superannuation guarantee rate rise easy. Getting organised now means that you will be well prepared for your business's potential increased costs when the first payment is due later this year.