Important Changes to Employee Superannuation Guarantee Contributions
As of 1 July 2021 super guarantee contributions will be increasing from 9.5% to 10%. From there it will continue to increase by 0.5% each financial year until it reaches 12%.
What you need to do:
Review your employment contracts to confirm whether your employees are on a package or salary plus superannuation.
If your employer is on salary plus super:
This means the business will most likely need to absorb the cost of the increase as it may be a challenge to convince your employees to accept a salary reduction.
One way to do this may be to pay the extra 0.5% and then when it comes to reviewing their salary, take into account that they’ve already received an additional 0.5% and adjust their salary increase accordingly.
If your employee is on a package:
Technically the business won’t have to absorb the cost as it just changes the package ratio. However, again this might be an awkward conversation to have with an employee, especially if they are valuable to the business.
Again, you may wish to absorb the cost yourself and reduce any salary increase by 0.5%.
Important:
Whatever you decide to do, bear in mind that you’re setting a precedent for the coming years.
Financial year Employee SGC Rate
1 July 2021 – 30 June 202 10%
1 July 2022 – 30 June 2023 10%
1 July 2023 – 30 June 2024 11%
1 July 2024 – 30 June 2025 11%
1 July 2025 – 30 June 2026 (and onwards) 12%
You may have heard that the Liberal party is currently lobbying to extend the start date, however at this stage it’s set to commence 1 July and we would encourage you to be ready by this date. If there’s any further news we’ll be sure to let you know.
If you have any questions at all, please reply to this email or call us on 03 9725 2533
The Hendrie Group Accounting team
PS. Bear in mind that this applies to you if you’re an employee of your company.
