Superannuation Guarantee increase impact on businesses

The super guarantee is estimated to increase a 0.5% every year. One of the most common questions we receive on the helpline is “How do we accommodate the Superannuation increase year after year”?
The legislation to increase the superannuation guarantee was introduced by the Labor government back in 2012, after first being announced in the 2010-2011 Federal Budget. At the time, the superannuation guarantee was 9% and was set to increase in stages to 12% by 1 July 2019. 

While the superannuation guarantee did rise to 9.25% on 1 July 2013 and to 9.5% on 1 July 2014, it was then frozen by the Coalition government.  The Government subsequently delayed the planned increases and the rate stayed at 9.5%, effective until 1 July 2021. It is now scheduled to reach 12% on 1 July 2025.
The proposed rates are:
PeriodGeneral Super Guarantee (%)
1 July 2021 – 30 June 202210.00
1 July 2022 – 30 June 202310.50
1 July 2023 – 30 June 202411.00
1 July 2024 – 30 June 202511.50
1 July 2025 – 30 June 202612.00
Super Guarantee PercentageEffect on employers & employees:
The 0.5% increase will impact wage packages across the country. Employers need to be cognizant of how they want to implement this on their employee wage packages. A choice has to be made between accommodating the increase into the existing salary package or on top of the package.
Salary sacrifice arrangements:
Employers need to be cautious about not using an employee’s salary sacrifice contributions for the yearly super increment. Any sacrificed ordinary time earnings commonly known as OTE’s which form the base for the super guarantee are now included in the final OTE amount.

These changes are set to have a strong impact on the Australian workforce. To help you navigate these changes feel free to contact us for a one-on-one conversation.
CLICK HERE for official details as per ATO publication dated: 6 July 2021