Superannuation changes

On 1 July 2022, the superannuation guarantee rate will rise from 10% to 10.5%.

As some pay periods will cross over between June and July when the rate changes, the Australian Taxation Office has confirmed the date the employee is paid determines the rate of superannuation guarantee payable, regardless of when the work was performed or income earned. As a result, the rate of 10.5% will need to be applied for all salary and wages that are paid on and after 1 July 2022, even if some or all of the pay period it relates to is before 1 July 2022. Therefore, if the pay period ends before 30 June, but the pay date falls on or after 1 July, the 10.5% rate applies on those salaries and wages. For example, if the work was done:

• in June (or partly in June and partly in July) but employees were paid in July, the applicable rate is 10.5% and contributions totaling 10.5% of the employee’s ordinary time earnings for the September 2022 quarter must be made to the employee’s superannuation fund by 28 October (or 28 August if paid monthly).

• in July but employees were paid in advance (before 1 July), the rate is 10% and contributions totaling 10% of the employee’s ordinary time earnings for the June 2022 quarter must be made to the employee’s superannuation fund by 28 July.

An additional change effective 1 July 2022 is the removal of the $450 threshold. Therefore, from 1 July, all employees will be eligible to superannuation irrespective of how much they earn. However, for workers under 18, employers only need to pay superannuation when they work more than 30 hours in a week.

As a result of this threshold change, some employees may be eligible for superannuation for the first time.

If the removal of the threshold results in paying superannuation for one or more employees for the first time, a “Standard Choice Form” will need to be provided. Alternatively, this form can be completed via myGov or some payroll software provides this onboarding function.

As a result of these changes, we recommend all payroll software is updated to reflect the correct superannuation guarantee rate, and the first pay run paid (or received) in July is reviewed to ensure the correct rate and entitlement has been applied.

If you would like to discuss these changes, please do not hesitate to contact our office.