Despite pressure from some sections of government to place a temporary hold on the legislated superannuation increase due to Covid-19, it was announced this morning that the employer minimum super guarantee contribution will increase by 0.5% as planned on 1st July to 10%. This is the first of the increases that will see the rate rise to 12% over the next six years.
Depending on an employer’s remuneration structure, how this change is calculated and communicated will need to be considered now. Whilst those employers who offer a “salary + super” package will see an automatic change to their employer contribution, those employers who offer a “Super inclusive package” will need to decide if an employee’s total package is increasing by 0.5% or will the employee actually see a reduction in their salary earnings.
Additionally, those employers who offer an enhanced super package i.e. currently paying above the 9.5%, will need to consider whether the increase is absorbed into their already higher rate or will their enhanced contribution shift accordingly.
Other thresholds and rate changes include the Quarterly Maximum Contribution Base increasing to $58920 and the Concessional cap increasing to $27500.
For all Australian activpayroll customers, the changes to Employer SG and the MCB will be applied automatically.
For more information on Australia’s tax system, explore activpayroll’s Australia Global Insight Guide.