Superannuation Guarantee Increase 1 July 2021
On 1 July 2021, the super guarantee rate will rise from 9.5% to 10%. Employers need to ensure payroll and accounting systems are updated to incorporate the increase to the super rate.
All payroll payments made from 1 July onwards will have the 10% superannuation rate applied, even if part or all of the pay period falls in June. Superannuation obligations are always determined based on the pay date.
Employers may need to review employment contracts to determine whether any changes are required prior to 1 July 2021. Where contracts refer to ‘salary plus 9.5% superannuation’, the contracts should be updated to refer to ‘salary plus minimum superannuation guarantee contributions required’. Employees with a remuneration package that is specified as inclusive of superannuation, with no percentage or reference to the minimum superannuation contribution may need to be reviewed; potentially this could mean a decrease in before tax salary for those employees.
To view further ATO information, click here
Superannuation Guarantee Exemption Removed
The minimum earnings of $450 gross per month in order to be eligible for super will be removed. This means that employers will now be required to make superannuation contributions for their low income earners, unless another exemption applies. The removal of this threshold will take effect from 1 July 2022, though it has not yet been legislated.
To view further ATO information, click here
Super stapling rules are proposed to become effective on 1st of July 2021. Currently, if a new employee does not choose or nominate a superannuation fund an employer makes contribution on behalf of the employee into the employers chosen default super. As a result, many employees have multiple super funds.
In the last federal budget the government flagged its intention to address this by proposing the new rules for Stapling Super to be introduced from the 1st of July 2021. The legislation has not yet passed through parliament, but if these rules are passed there will be a new process for employers to check if a new employee has chosen a superannuation fund and if not, the employer will need to determine what fund the employees’ stapled fund is. A stapled fund is the last superannuation fund that contributions were made to on the employees’ behalf or if they have several funds, the fund that has the largest account balance.
To keep updated on the progress of the legislation, and to view the draft legislation, click here
