The Superannuation Guarantee (SG) is the contribution made to your employees superannuation fund and is currently set at 9.5%.  Some employers may be familiar with recent changes to the superannuation guarantee announced in the 2020-2021 budget but for those that aren’t across the changes we recommend reading on to ensure you are compliant when changes are scheduled to take effect from 1 July 2021.

Here are the four key things that you need to know.

  • Superannuation is scheduled to be increased from 9.5% to 10% as of 1 July 2021. Anything below this rate paid as SG guarantee is a breach of employer’s obligations. Treasurer Josh Frydenberg has said that the final decision on the SG increase will be made in the May 2021 budget.
  • Employees will be able to retain the same super accounts when changing jobs. According to the Treasury, these changes will see workers automatically keep their super fund when they change jobs, ‘stapling’ the super account to the employee.  The government argues that this will prevent the creation of multiple super accounts and increase individual’s super balances.
  • Fund administrators will be required to provide more information on investment decisions giving more transparency on how super funds are being invested.
  • Underperforming super funds will be named and shamed measured by an annual performance test under the government’s reforms, with results being made public on a government website. Funds that fail two tests consecutively will be blocked from accepting new members.

So who is eligible for SG payments?

Generally, employees who are paid $450 or more (before tax) in a calendar month and work on a full-time, part-time, or casual basis should receive super contributions.

You need to pay SG contributions for employees who are at work or on leave such as:

  • Paid sick leave
  • Long service leave
  • Annual leave
  • Workers’ compensation (in some circumstances).

Under the legislation, you don’t have to pay SG contributions for employees who are:

  • Earning less than $450 in a calendar month
  • Under 18 years of age and working less than 30 hours a week.
  • Away from work and not receiving pay, such as on parental leave or approved leave without pay.

Super Guarantee rate increase

The SG rate will increase to 10% on 1 July 2021, and then continue to increase until it reaches 12% on 1 July 2025.

Date SG Rate
1 July 2016 9.5%
1 July 2017 9.5%
1 July 2018 9.5%
1 July 2019 9.5%
1 July 2020 9.5%
1 July 2021 10%
 1 July 2022 10.5%
1 July 2023 11%
1 July 2024 11.5%
1 July 2025 12%

We know that these proposed changes in superannuation may be confusing.  If you have any questions we recommend speaking to your qualified Accountant to ensure your business meets compliance.

Pinnacle Tax & Accounting in Camden services Narellan, Picton, Wollondilly, Macarthur, Smeaton Grange, Oran Park, Gregory Hills areas.  We welcome the opportunity to chat with you further on your businesses accounting and taxation requirements.

This blog is merely general and non-specific information on the subject matter and is not and should not be considered or relied on as advice. Pinnacle Tax & Accounting is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.