Super Changes Start Today: What do you need to know and do?
We did alert you to these changes a few months back, but the day of change is finally here.
From today, 1 July 2022, a few things in super change which will impact payroll.
You need to be aware of these changes as they will not only affect your current employee costs but also need to be considered when negotiating remuneration for new employees.
The Super Guarantee Rate will increase
The Super Guarantee Percentage will increase from 10% to 10.5% from 1 July 2022. It will progressively increase by another 0.5% each 1 July following until it reaches 12% on 1 July 2025
Removal of the $450 per month threshold for Super Guarantee eligibility
From 1 July 2022, the $450 per month threshold under which we previously didn’t have to pay super will no longer exist. Employers will be required to make super guarantee contributions to their eligible employee’s super fund regardless of how much the employee is paid.
A recap on who is an eligible employee can be found at https://www.ato.gov.au/business/super-for-employers/work-out-if-you-have-to-pay-super/
This change applies to all eligible employees over 18, irrespective of how many hours they work. For employees under 18 it applies where they work more than 30 hours in a week, regardless of how much you pay them.
Removal of the award specific $350 per month threshold for Super Guarantee eligibility
This threshold for the Restaurant and Hospitality Awards will no longer apply from 1 July 2022.
Reminder re Super Guarantee and Salary Sacrifice Arrangements
From 1 January 2020, salary sacrificed super contributions are no longer considered super guarantee contributions. This means super guarantee contributions must be paid on the pre salary sacrificed gross remuneration of an employee.
For example, if an employee elects to salary sacrifice 5% of their remuneration package into super, you are still required to pay super guarantee contributions on their ordinary times earnings, including the salary sacrifice amount.
Considerations where employees are on a set remuneration package including super
If an employee’s package is a set amount inclusive of super you will need to consider how your business deals with the super rate increase.
Will you absorb the rate increase, effectively increasing your employment cost and uplifting the employees remuneration package or will you adjust the employee’s wage down so his/her overall package remains the same?
What do you need to do, if anything, before your first pay run in July?
Consider if your software will automatically take care of the rate increase and $450 threshold removal.
If you are not under the Restaurant or Hospitality Award:
- Xero – you need to do nothing
- MYOB – you won’t need to do anything where the threshold removal is concerned, however with the rate increase this will only increase to 10.5% automatically if the employee’s super rates is set to 10% as at 30 June 2022. If it is not set at 10%, it appears you will need to make this change manually.
If however, you are under the Restaurant or Hospitality Award, you likely will have had to manually create a work around to cater for this specific threshold and will need to ensure the necessary changes are made to reflect the removal of the threshold. This, we imagine, would be the case for most software packages.
We suggest that regardless of which payroll software you are using that you spot check a few employees when preparing your first pay run in July 2022 to check the amount of super calculated on their pay slip is correct. If it is not, you will know that some settings need to be corrected.
If Beam can help in any way please reach out and one of our team will be more than happy to help you.
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