With sweeping changes to the Employment space in full force, is your enterprise prepared for the revamped Superannuation Guarantee (SG) regime effective from 1 July 2022?

What changes do you need to be across as the new financial year commences?


Superannuation Guarantee Rate Increase

The SG rate is set to increase from 10% to 10.5% on 1 July 2022, with further increases of 0.5% per year from 1 July 2023, until it reaches 12% from 1 July 2025 onwards. Employers must update their payroll settings to reflect the 0.5% increase, however the financial impact on the employee will depend on the terms of their existing and new salary packages.

The effect of the increase on salary packages needs to be carefully considered to determine whether the additional 0.5% SG contribution will be added to an employee’s existing package or incorporated into the existing salary package amount (e.g. salary including super). You should review your employment contracts to consider how this applies to your employees.  If the SG rate increase results in a reduction of an employee’s take home pay, employers will also need to consider whether they are complying with relevant Modern Awards and its revised pay rates.


Elimination of Monthly Threshold

Previously, employers were not obliged to pay Superannuation for employees earning less than $450 per month over eighteen (18) years of age. Moving forward, this minimum threshold will be repealed. As such, employers are required to make SG contributions for all classes of employees, including casual and part-time, irrespective of their income.

It is important to note that employees under eighteen (18) years of age are entitled to SG contributions if they work more than thirty (30) hours per week.

The elimination of this threshold will assist three percent (3%) of the workforce, primarily comprised of lower income female earners.


Compliance

In the aftermath of Covid-19, the Australian Taxation Office (ATO) has indicated that a firmer approach to compliance will be exercised, particularly to employers failing to satisfy their SG obligations.

Whether it be failure to lodge an annual SGC statement or comply with an audit, the ATO has the power to pierce the corporate veil and impute personal liability on a company director for breach of the Superannuation Guarantee (Administration) Act 1992 (Cth).

For more information on how company directors may be held personally liable for corporate breaches, read our article here.


Next Steps

Don’t fall into the trap of underpayment and contact the Workplace Law Team to understand your obligations, review and amend your contracts to reflect these changes and maximise compliance. Don’t wait until the ATO is knocking on your door and contact us to get your house-keeping sorted today!