(08) 9071 2173
From 1 July 2021, the standard Superannuation Guarantee (SG) rate increased from 10% up to 10.5%. You must apply the new rate from all salary and wage payments made on or after 1 July 2022. The Super Guarantee rate is legislated to go up by 0.5% on the 1st of July each year until 2025. It will then stay at 12% going forward from that date.
It's important to check your accounting software has been updated to incorporate the 0.5% increase to the superannuation guarantee. You also need to consider how to communicate these changes to your employees.
If your employees are on a base salary or wage, they will have received a pay rise as Superannuation guarantee (SG) is paid in addition to your employees’ base income. If an employee has a salary sacrifice arrangement in place, you may need to amend their arrangement to ensure they don't go over the concessional contribution cap of $27,500 this financial year.
The SG increase will affect the take-home pay of any employees who are on a superannuation-inclusive salary package. You'll need to communicate this to your employees - if you haven't already - as soon as possible.
Some businesses might be thinking about a pay increase for those on superannuation-inclusive wages. Ensure your business has planned for this rollout from an operational and financial perspective.
Smith Shearer have created a letter template for you to communicate these changes to your employees. Simply click on the links below to download a copy of the template for your use.
The government has also removed the $450 per month threshold for SG eligibility, meaning all eligible employees are able to access the superannuation guarantee regardless of their pay. As per above, you must ensure you communicate these changes with your employees.
If you're planning a pay rise for employees on superannuation-inclusive salaries and wages, you should run a cashflow impact analysis to inform your decision making surrounding a 0.5% increase in your cost of employment. Remember the increase may also impact your workers compensation insurance and payroll tax obligations.
Our director Gavin Smith recently ran a seminar on 'The Power of One' - an analysis of the impact of a 1% or 1-day change in external factors impacting your business. Along with the current rising costs associated with inflation and increasing interest rates, the SG increase may impact your profit, cashflow and overall business value.
If you'd like guidance and assistance in navigating the current increase - and future increases until 2025 - with confidence, reach out to us below.
As always, the Smith Shearer team are here to help you navigate these changes. If you have any questions about how this might impact your business, complete the form below and we'll be in contact.