Australian employers must pay their employees’ superannuation contributions at a specific rate, referred to as Superannuation Guarantee (SG). The ATO includes full-time, part-time, and casual workers in the applicable categories, with employers required to pay superannuation quarterly.
This year, the SG rate is changing, and the following guide will detail all you need to know to ensure you’re up to date with the new rates.
The New Super Guarantee Rate
From July 1st, 2023, the SG rate will rise from 10.5% to 11%. Employers must note this and apply it to their employees’ wages from July 1st onwards. It’s also beneficial to remember that SG rates will continue to rise on July 1st each year by 0.5% until the rate reaches 12% on July 1st, 2025.
Why is the Super Guarantee Rate Changing?
SG rates gradually rise by 0.5% each year to allow employees and employers to adjust to these changes, with an increase in annual income going towards superannuation instead of being readily available in a paycheck.
While some employees may wish this money went straight into their pockets instead of toward superannuation, SG rates have several benefits. The Australian Government’s goal with superannuation is for Australians to save for retirement more efficiently, enabling the current working generations to live comfortably when they reach pension age.
How Does The Superannuation Increase Affect Employees?
As an employee, the SG rate increase means your retirement savings will have more going into them, potentially improving your retirement lifestyle. The main downside of the SG increase is that your take-home pay may slightly decrease, but different employers will handle SG in various ways, so it’s best to check with your employer to be sure of how your take-home pay will be affected.
How Does The Superannuation Increase Affect Employers?
Employers will need to factor higher SG rates into their budgets, with the additional payments equating to higher super costs for businesses. Updating payroll systems and openly communicating with employees on how the SG increase will affect their take-home pay is an essential step in this process.
For all enquiries, please do not hesitate to contact us at Advisory One, or visit our office located at Shop 1/205 Howick Street, Bathurst NSW. We’d love to hear from you!