Are you prepared for new Superannuation Guarantee rates which start on July 1?
Read on to find out how changing superannuation guarantee rates will affect you.
Contributor: Dooleys Lawyers and Solicitors, Sydney, NSW, Australia, March 18, 2013
The commencement of the changes to our superannuation system is now drawing near.
In an attempt to increase the level of retirement funds available to the aging population of Australia, the Government acknowledged the recommendations of the Henry (Tax) Review and took steps to implement an increase to the annual superannuation contributions for Australian workers. As such, the new rate will take effect from 1 July 2013 with contributions rising initially from 9.00% to 9.25% and then rising further at the beginning of each subsequent financial year. This will bring the Super Guarantee rate to 12.00% by 2019. See the table below for the annual increase schedule.
Financial Year – % change per year
Businesses will need to ensure they are prepared. Preparation not only covers the manner in which employers will implement the increased superannuation payment, but it also covers the method each business will use to ensure their staff understand what will occur regarding their own superannuation remuneration. Under the normal process of staff engagement, one of three methods of remuneration is undertaken:
A) a base salary plus super and other negotiated benefits,
B) a fixed remuneration package or
C) an individually negotiated combination of A & B.
Employers will need to look at the remuneration package relating to each individual staff member and ensure that they have communicated clearly the affect the changes will have on the staff members salary and how the new superannuation guarantee amount will be calculated and then paid.
Employers should also be aware that the upper age limit for superannuation guarantee payments to mature workers has been removed and eligible employees 70 years and older will need to be paid according to the scale above also.
The ATO advises that Employers should follow these procedures to ensure they are contributing correctly:
– Update your payroll and accounting systems to include the increase to the super guarantee rate
– From 1 July 2013 increase the rate you use to work out the super guarantee payments you make for your employees from 9% to 9.25%
– Increase the rate you base your super guarantee payments on each year from 2013 until 1 July 2019
– Consider using the Small Business Superannuation Clearing House if you have 19 or fewer employees
Additionally, from 1 January 2014, if an employee has not selected a fund for their superannuation payments to be directed to, Super Guarantee payments should be paid to MySuper.
Should you require any further information regarding correct employee payments, please contact Dooley and Associates. Our employment team can assist you with all aspects on contracts, employee entitlements and general employment issues.
Dominic is the CEO of Lawpath, dedicating his days to making legal easier, faster and more accessible to businesses. Dominic is a recognised thought-leader in Australian legal disruption, and was recognised as a winner of the 2015 Australian Legal Innovation Index.