22 June, 2021

Important changes to super rules

There are some important upcoming changes to super rules which you need to know about.

The super guarantee is increasing to 10%

From 1 July 2021, the super guarantee (SG) rate will increase from 9.5% to 10%. The SG rate had been frozen at 9.5% since 2014, despite originally being scheduled to rise to 10% in July 2015. The SG rate is scheduled to increase gradually to 12% by 2025.

The Australian Taxation Office (ATO) has reported that there has been confusion around when exactly employers need to begin increasing the SG payment to 10%. They’ve provided the following example:

If an employee is paid $1,000 on 30 June, their employer is required to make a $95 SG contribution to their super fund by 28 July. If an employee is paid $1,000 on 1 July, a $100 SG contribution should be paid by 28 October.

In other words, the new 10% SG rate applies to all ordinary time earnings (OTE) paid from 1 July 2021 to 30 June 2022. The 9.5% SG rate applies to all OTE paid from 1 July 2014 to 30 June 2021.

It doesn't matter when the work was done. If the work was done in June, but the employees were paid in July, the SG rate is 10% and is due by 28 October. If the work was done in July, but the employees were paid in June, 9.5% SG is payable by 28 July.

Removal of the $450 a month income threshold for super contributions

Still a while off, but from 1 July 2022, employers will no longer be exempt from making SG payments for employees who earn less than $450 (before tax) a month.

Read more about these changes as well as other recently-announced proposed changes to super.

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