Employers need to ensure payroll systems are updated to pay increased superannuation contributions to all employees including those under 18 years old.
Superannuation Guarantee Contribution will increase to 10.5%
The Superannuation Guarantee Contribution (SGC) is the amount an employer must pay into an employee's super fund. It is based on the employee's gross (before tax) ordinary time earnings.
The SGC is currently 10 per cent and will increase to 10.5 per cent on 1 July 2022. It will continue to increase every financial year until reaching 12 per cent on 1 July 2025.
- 1 July 2022 – 30 June 2023: 10.5%
- 1 July 2023 – 30 June 2024: 11.0%
- 1 July 2024 – 30 June 2025: 11.5%
- 1 July 2025 onwards: 12.0%
The $450 per month threshold for SGC eligibility will go
As announced by the Australian Government in the 2021-2022 budget, the $450 gross per month threshold will no longer apply. This means employers must pay the SGC to all adult employees regardless of how much they earn.
New rule for employees under 18 years old
The abolition of the $450 per month threshhold will also apply to employees under 18 years old. However, to be eligible for SGC, they will have to work more than 30 hours in a week. In other words, an employee who is under 18 and works more than 30 hours in a week will be entitled to SGC on all their gross ordinary time earnings that week.
What should employers be doing to prepare for the changes?
If you are an employer there are four important things to do.
- Update the payroll system to process 10.5 per cent SCG from 1 July 2022
- Ensure SCG is applied only to ordinary time earnings and not overtime
- Ensure that any employee under 18 years old receives SCG when they work more than 30 hours in a week after 1 July 2022
- Recalculate your charge-out rates to factor in the 10.5 per cent SCG
For more information
The following are links to information from the Australian Taxation Office.