Tax & Advisory

Preparing your business for Super changes

09
May

Talking Points

  • From 1 July 2022, the minimum superannuation contribution rate increases from 10% to 10.5%.
  • The $450 per month gross earnings threshold has been removed to expand coverage of the super guarantee to all eligible employees, regardless of their monthly pay.
  • All employers should review their staff’s employment contracts and ensure these are correctly reflected in their payroll systems as at 1 July as it will determine who pays the 0.5% increase – the employee or the employer.
  • Please see below for a calculation of how this will affect your staff and payroll system.
  • For a review of your payroll’s superannuation settings and to learn more, reach out to our team.

Let’s look at an example

Sally earns $100,000 per year
Scenario A – Base Package Scenario B – Base Pay Plus Super 
If Sally is employed on a “base package” arrangement, the additional 0.5% ($500 / year) super contribution will be made from her existing salary package. Therefore, the payroll system will redirect $500 of her regular pay to her superannuation account. If Sally is employed on a “base pay, plus super” arrangement, the additional 0.5% ($500 / year) super contribution will be made by her employer in addition to her existing salary package. Therefore, the payroll system will add $500 / year to her superannuation account without impacting her regular take-home pay.

Review Employment Contracts and Update Payroll

It is critical for all employers to review current active employment contracts and ensure that the superannuation increase is correctly processed out of the business payroll system for the new financial year, in line with the terms of each employment contract.
 
Whilst most payroll systems should be able to automatically handle the increase in superannuation, this is dependent on whether all employees were properly setup in that payroll system.
 
If you need assistance with ensuring your business’s payroll system is geared correctly for the superannuation increase, CharterNet can help, so feel free to contact us.