Super Guarantee Rate Rise to 10.5% Now in Effect

Super Guarantee Rate Rise to 10.5% Now in Effect

The super guaranteed rate rise is now in effect and has been since July 1, with the new rate now at 10.5%. For small businesses, it’s important to factor in the changes to your budgeting- have you calculated the extra cost to your business? At Figure 8 Accounts, we’re here to help highlight the important things to consider with these changes.

Some Background

The superannuation guarantee statutory rate has remained at 9.5% since July 2014. However, plans have been in place for some years now, to increase the rate to 12% incrementally. The rate was originally set to increase to 10% in July 2015, however the government legislated to slow the gradual increases in the rate, delaying it by several years. From now on though, the rate will increase by 0.5% each year until July 2025 when it will reach the legislated 12%.

What you need to do

It’s important to note, this rate increase may also affect salary packages. As an employer, it’s imperative to effectively plan for the additional payroll costs but also to ensure you’re across your employee contractual agreements. Remember – short payment or late payment of super can incur hefty penalties, so make sure you take action now to avoid any penalties. Some steps to consider:

  • Review your current superannuation costs for all employees, both hourly and salaried.
  • Review any salary packaging arrangements. Is the agreement inclusive of superannuation or is super paid on top of the agreed salary?
  • For salary packages inclusive of super, you will need to check the contract’s wording to make sure you apply the changes correctly. This change may also impact annualised salary arrangements.
  • Calculate your revised payroll costs from July, showing the before July wages and superannuation expense compared to the new rate from July 2022. Highlight the increased amount per month or quarter, so you know precisely what the impact will be.
  • Discuss the super rate increase with your employees now. Let them know of the increase of 0.5% each year from now until July 2025 when the statutory rate will reach 12% and remain there.

With enough preparation and planning, these changes now and into the future can be managed and budgeted for effectively. And remember, if you need professional help from an experienced team in reviewing payroll costs and employee agreements, talk to Figure 8 Accounts today. Our expert bookkeepers are across the latest legislation, so you can be sure your business has access to the best-in-class. We can also make sure you have accurate reports to make planning for the rate rise easy. Contact us today.

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