Super Guarantee Going Up to 10.5%

Changes to superannuation for the new financial year are coming – so, how will they affect you?

Back in February we covered the previous updates to superannuation, since it’s always a good idea to stay across how contributions are being made by your employer, or what your obligations to employees are.

With the rate now set to increase again, let’s take a top-level look at what’s changing, how it affects employees, and what further changes will happen to help secure your super for the

From 1 July 2022, the superannuation guarantee rate will increase to 10.5% - an increase of 0.5% from the current rate.

Legislated by the Australian Government, the aim is essentially to allow Australians to accumulate more superannuation over their working lives, so they’ll have more saved by the time they retire.

The super guarantee rate will be due for another rise of 0.5% every year until 2025, when it will reach 12% – a total increase of 2.5%.

-        1 July 2021: Rate rose from 9.5% to 10%

-        1 July 2022: Rate rising to 10.5%

-        1 July 2023: Rate rising to 11%

-        1 July 2024: Rate rising to 11.5%

-        1 July 2025: Rate rise caps at 12%

Basically, the superannuation guarantee defines the minimum percentage of your earnings that your employer needs to pay into your super fund.

The Australian Government controls and legislates the super guarantee, to ensure everyone is receiving a reasonable contribution.   

As an employee, if you’re paid $450 or more before tax in your calendar month your employer has needed to pay superannuation on top of your wages. This applies across the board, whether you’re a full-time, part-time or casual worker.

Employers will offer you your own choice of super fund when you start your employment. Where an employee doesn’t choose a super fund, employers can now request ‘stapled super fund’ details from the Australian Taxation Office (ATO) instead, as of 1 November 2021.

Until now, business owners haven’t had to pay super to employees earning less than $450 per month. However, from 1 July onwards this cap is being removed. That means all workers over the age of 18 — regardless of how much they work during a month – will start receiving super contributions.

Also, employees under the age of 18 will now require super payments if they work more than 30 hours in a week, no matter how much they earn.

If you’re an employer, it’s a good idea to review your books and make sure you’re across the changes to the superannuation cap given above, so everyone’s getting paid the correct amount.

On top of this, here’s a quick run-down of what your super obligations to employees typically involves.

• paying super contributions for eligible employees four times a year, by the quarterly due dates, or more frequently if required. Some contractors might also be entitled to super.
•  paying and reporting super electronically in a standard format, ensuring you meet SuperStream requirements.
•  paying super to complying super funds.
• checking if employees are eligible to choose their own super funds, and providing eligible employees with a Standard choice form.
• advising employees of your employer nominated fund (also known as your default fund). Where employees don’t nominate their choice, or until they do, pay their super guarantee into your default fund.
• giving the employee’s tax file number (TFN) to their super fund within 14 days of receiving their TFN declaration form. If you don't make contributions during this period, you can provide the TFN when you make the contributions.
• keeping records of super contribution payments and evidence that you offered a choice of super fund to eligible employees.

To get further info on these changes, as well as how they’ll affect you either as an employee or employer, visit Australian Super online today.