How upcoming Superannuation Eligibility Changes may Impact your Payroll

How upcoming Superannuation Eligibility Changes may Impact your Payroll

As a small business, you may already be aware of and have begun planning for the expected statutory super rate rise to 10.5%. However from July 2022, as part of the 2021–22 federal Budget, the Australian Government announced another significant change to Super payments that may need to be accounted for by some employers, in order to avoid any unwanted surprises in additional payroll costs.

The $450 Monthly Earnings Threshold Removed

From July 2022, the $450 per month eligibility threshold will be removed for most workers. What does this mean for you? Employers will need to pay the superannuation guarantee contribution (SGC) on all ordinary earnings regardless of the employment type (full, part-time or casual) and their earnings, and the change has now been made law.

However there are some exceptions to the rule:

  • Employees under 18 and domestic workers need to work more than 30 hours per week and earn more than $450 per month
  • Contractors deemed employees for superannuation contributions must earn more than $450 per month.
  • There are different rules for international and temporary workers, for more information you may refer to the ATO website

If, like a lot of small businesses in the Camden and Macarthur areas, you rely on a large pool of casual workers who earn less than $450 per month, you’ll most likely notice the extra cost when it comes to paying SGC for the September quarter, so planning ahead for this change will be key.

Super Reporting through Single Touch Payroll (STP)

All employers need to report their payroll information to the ATO through STP- an Australian Government initiative bought in to make reporting tax and superannuation easier. As part of what’s reported, this includes super amounts owed to employees. Word of advice – late payment and interest penalties are expensive, so this is one employer obligation you should put on the priority list to plan effectively for. It may be advisable to also let your employees know about the changes coming to their super, so they know about their entitlements.

Planning for Increased Payroll Costs

Time is currently on your side, and by being proactive in costing your payroll now to budget for the increased costs, this can save you some heartache later. Our team of professional and expert accountants at Figure 8 Accounts can assist you in planning for the impacts of increased super expenses on your business and can even perform a review of your current payroll systems and costs to ensure you’re on the right track. Simply get in touch with us today to arrange a discussion of your needs.