The Super Guarantee rate is set to change this financial year for the first time since 2014. But that’s not the only change to super this year. Here’s what employers need to know about the superannuation changes in 2021:
Is superannuation increasing in 2021?
The rate of compulsory super is now 10%, up from 9.5% in the 2020/2021 financial year.
This rate will increase by .5% each year until the 2025/2026 financial year, when the super guarantee rate reaches 12%. It will remain at 12% through to at least 2028.
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What the superannuation increase means for employers
Employers should have reviewed the terms of the existing employment contracts to confirm whether superannuation is included in a wage package, or is in addition to your employees wages.
For employees whose superannuation forms part of a package, you should have already adjusted the payroll settings to reflect the additional .5% contributed superannuation. This will result in those employees receiving less money into their bank account for each pay period. You should anticipate queries regarding this and it may be beneficial to email affected employees to alert them to the change.
You will need to pay your employees superannuation to the ATO at least quarterly. Payment is due by 28th of the month following the end of each quarter (28th July, October, January & April).
Contractors may be entitled to superannuation too.
Employers should be aware that some contractors may be treated as employees for superannuation purposes, which means they may be entitled to superannuation payments too.
Are there other superannuation changes in 2021?
2021/2022 changes to concessional cap limits.
The concessional contributions cap has increased to $27,500 from 1 July 2021. You may wish to remind your employees that any contributions in excess of this amount will likely be subject to higher tax rates and an excess contributions charge.
Anticipated changes to superannuation for the 2022 financial year
The 2021 Federal Budget proposed a number of changes that will likely come into effect next year:
Removal of the $450 minimum threshold
The 2021 Federal Budget proposed the removal of the $450 per month threshold for employees to qualify for the Superannuation Guarantee. While this will need to be legislated, we anticipate that it will be pushed through and will come into effect from 1 July 2022.
No more ‘work test’ for voluntary super contributions
The 2021 Federal Budget also proposed a plan to repeal the ‘work test’ for voluntary superannuation contributions from 1 July 2022. This means that workers aged between 67 and 74 will be able to make voluntary contributions and salary sacrificed contributions without needing to meet the work test. Again, this measure is not yet law, but we anticipate that it will be enacted in the near future. You may wish to alert any relevant employees to the anticipated changes.
Again, these changes have not yet been made law. For the time being, the current rules continue to apply. Please check in again in May 2022 to confirm these changes.
Please don’t hesitate to get in touch if you need any assistance navigating these changes.