Superannuation Guarantee increase impact on businesses

The super guarantee is estimated to increase a 0.5% every year. One of the most common questions we receive on the helpline is “How do we accommodate the Superannuation increase year after year”? and “How does it impact businesses”.

The Labor government announced the legislation to raise the superannuation guarantee in the 2010-2011 Federal Budget. It aimed to gradually increase it from 9% to 12% by 1 July 2019.

The Coalition government froze the superannuation guarantee after it had risen to 9.5% on 1 July 2014, following an earlier increase to 9.25% on 1 July 2013. The Government subsequently delayed the planned increases and the rate stayed at 9.5%, effective until 1 July 2021. It is now will reach 12% on 1 July 2025.

The proposed rates are:

PeriodGeneral Super Guarantee (%)
1 July 2021 – 30 June 202210.00
1 July 2022 – 30 June 202310.50
1 July 2023 – 30 June 202411.00
1 July 2024 – 30 June 202511.50
1 July 2025 – 30 June 202612.00
Super Guarantee Percentage

Effect on employers & employees:

The 0.5% increase will impact wage packages across the country. Employers need to be cognizant of how they want to implement this on their employee wage packages. You have to choose whether to include the increase in the existing salary package or add it on top of the package.

 Salary sacrifice arrangements:

Employers need to be cautious about not using an employee’s salary sacrifice contributions for the yearly super increment. The final OTE amount now includes any sacrificed ordinary time earnings (commonly known as OTEs), which serve as the base for the super guarantee.

These changes implementation means to have a strong impact on the Australian workforce. To help you navigate these changes feel free to contact us for a one-on-one conversation.
CLICK HERE for official details as per ATO publication dated: 6 July 2021

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