Super Guarantee to Increase to 10%

The minimum percentage employers are required to pay is set to increase over time, with the next increase to 10% due on 1st July 2021. This should be considered in part, a wage increase.

What This Means for Small Business

The proportion of wages that employers must contribute to their workers’ superannuation is legislated to increase half a percent a year before reaching a final value of 12% by 2025.

The superannuation guarantee is paid in addition to base salary. For example, if an employee’s contract is $60,000 plus super, as an employer you will pay a gross income of $60,000 to the employee (less personal income tax withheld) and then make an additional $5,700 superannuation guarantee (or 9.5% of the base salary) to the superannuation fund. This worker’s total income (salary plus super contribution) is $65,700.
In this instance when the superannuation guarantee increases to 10%, an employee’s base income does not change. The employer will be required to make an additional $300 contribution to the employee’s superannuation fund (a total of $6,000). The worker’s total income is now $66,000.
Further to this, an employee on a minimum award wage cannot be paid less than the minimum rate already being paid, so therefore the SG at 10% is to be calculated on top of and without reduction to the original base amount.
Another factor to consider is if the employment agreement or other industrial relations instrument permits it, the components of an employee’s salary package can be altered to increase the SG to 10% and reduce the gross pay (before tax). It would be recommended reviewing the appropriate agreements and seek HR advice.
When the compulsory SG contribution level is increased, a business will need to adjust their payroll systems to pay the increased amount of super. If they don’t pay the correct rate of SG into employees’ super accounts by the quarterly due date, they may have to pay the Superannuation Guarantee Charge (SGC).

ATO Lodgement Dates

BAS/IAS Monthly Lodgements
Final dates for lodgements and payments:

April Activity Statement: 21 May 2021

May Activity Statement: 21 June 2021

BAS Quarterly Lodgements
Final dates for lodgements and payments:

4th Quarter 2021 Financial Year:
June Quarter 2021 (incl. PAYGI)
28 July, 2021

1st Quarter 2022 Financial Year:
September Quarter 2021 (incl. PAYGI)
28 October, 2021

When a due date falls on a Saturday, Sunday or Public Holiday*, you can lodge or pay on the next business day.

*A day that is a public holiday for the whole of any state or territory in Australia.

Due date for super guarantee contributions:

4th Quarter 2021 Financial Year:
April to June 2021 – contributions must be in the fund by 28 July, 2021

1st Quarter 2022 Financial Year:
July to September 2021 – contributions must be in the fund by 28 October, 2021

Late payments of superannuation are not tax deductible.

Source: ICB Vol 12 Issue 11, May 2021