Compliance alert for employers
Based on changes announced in the 2021-22 federal budget, employers will need to review their obligations regarding compulsory superannuation payments as a matter of priority.
Super Guarantee Increase
The super guarantee refers to the proportion of wages that employers must contribute to their workers' retirement savings. The minimum super guarantee is calculated as a percentage of each eligible employee’s ordinary-time earnings to a complying super fund or retirement savings account.
The super guarantee is legislated to increase half a percent a year before reaching a final value of 12% by 2025. As part of this plan, the super guarantee rate is set to increase to 10% from July 1, 2021 (and rise by 0.5% per year thereafter until it reaches 12% by 2025).
Minimum Threshold Removal
Another change announced in the federal budget is the removal of the $450 minimum threshold. Currently, if a person earns less than $450 per month from the one employer, they are not entitled to receive the super guarantee. Under the new arrangements, employers must pay all employees superannuation, regardless of how much money they earn.
The removal of the $450 minimum threshold will impact employers of casual or part-time employees in particular. However, this new arrangement won't come into effect until the first financial year after Parliament approves the legislation, which is expected to occur before July 2022.
It is important to ensure that you are paying your employees the correct entitlements, including the correct superannuation contributions.
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