What is the superannuation guarantee (SG)?
The SG is the % of an employee’s ordinary time earnings (in addition to their wages) that an employer must pay into the employee’s super fund. The SG amount is calculated by multiplying your employee’s ‘ordinary-time earnings’ for the quarter by the current SG rate.
What are the changes to SG rates?
From 1 July 2022, the SG rate increased from 10% to 10.5%. Therefore, you need to use the new rate of 10.5% to calculate super on payments made on or after 1 July. Legislation is in place for the SG rate to increase to 12% by 2025.
Payment of the SG for the financial year 2021-22 was due on 28 July 2022.
When are SG payments due?
SG payments are scheduled for FY 22- 23 as follows.
| Quarter | Period | Payment due date |
|---|---|---|
| 1 | 1 July – 30 September | 28 October |
| 2 | 1 October – 31 December | 28 January |
| 3 | 1 January – 31 March | 28 April |
| 4 | 1 April – 30 June | 28 July |
Has the $450 per month threshold for SG eligibility changed?
The $450-per-month threshold for the SG was removed on July 1, 2022. There are also changes to who is eligible for superannuation and how much they must be paid.
For example, employees under 18 are now entitled to SG payments if they work more than 30 hours in a week, regardless of how much they’re paid. Conversely, employees aren’t entitled to superannuation for hours worked if they worked less than 3o hours for the week.
All other eligibility requirements for super remain the same.
What is the superannuation guarantee charge (SGC)?
Failure to pay the correct amount of super on time will result in having to pay the SGC. Because the SGC is based on gross income, not ordinary time earnings as for the SG, you will incur additional costs. Additionally, you will have to lodge an SGC statement and pay the SGC to the ATO.
So, to avoid additional costs, make sure you update superannuation payments to incorporate the SG changes.
So how do I avoid additional super costs?
To avoid additional costs, key things you need to do is:
- Update your payroll and accounting systems to include changes to the SG payments.
- Calculate and pay the correct SG to all eligible employees.
- Pay SG payments in full by the due date.
Need help with your superannuation requirements? Contact our team of experts today.
Time is running out – don’t forget to apply for the New Directors’ ID
If you are a company director you are required to apply and meet the new directors’ ID requirements by 30th November. Check our previous article for more detail by clicking here. We can’t apply for a director ID on your behalf, but we can help you decide if you need to apply.