Superannuation Guarantee Charge

Super Guarantee to increase to 10%

The minimum super guarantee (SG) percentage employers are required to pay, is set to increase to 10% on 1st July 2021. This should be considered in part, as a wage increase, and therefore an increase to the overall payroll budget.


There is a further sting in the tail to come for employers! The proportion of wages that must be contributed to employees’ superannuation, is legislated to increase half a percent a year, before reaching a final value of 12% by the 2025/26 FY. See the table below which outlines the rate increase schedule.

PERIODGENERAL SUPER GUARANTEE (%)SUPER GUARANTEE (%) FOR NORFOLK ISLAND (transitional Rate) (from 1 July 2016)
1 July 2002 – 30 June 201390
1 July 2013 – 30 June 20149.250
1 July 2014 – 30 June 20159.50
1 July 2015 – 30 June 20169.50
1 July 2016 – 30 June 20179.51
1 July 2017 – 30 June 20189.52
1 July 2018 – 30 June 20199.53
1 July 2019 – 30 June 20209.54
1 July 2020 – 30 June 20219.55
1 July 2021 – 30 June 2022106
1 July 2022 – 30 June 202310.57
1 July 2023 – 30 June 2024118
1 July 2024 – 30 June 202511.59
1 July 2025 – 30 June 20261210
1 July 2026 – 30 June 20271211
1 July 2027 – 30 June 2028 and onwards1212

What This Means for Your Small Business

  1. Your payroll budget will increase by 0.5%, per employee, every year until the 2025/26 FY.
  2. An employee on a minimum award wage cannot be paid less than the minimum rate already being paid, therefore the SG at 10% is to be calculated on top of, and without reduction to, the original base amount.
  3. 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). This means that your employee’s take-home pay will be less than it is now and will continue to decrease each year until 2025. If this scenario affects you and your employees, we recommend that you review the appropriate agreements and seek HR advice before 1 July 2021.
  4. If you use an accounting software package, you won’t need to make any adjustments for the SG increase in your payroll – the developers will do that for you. If you process payroll manually, however, you will need to remember to change the percentage from 9.5 to 10 (and again by 0.5 % each year until you reach 12 % in 2025). Remember, if you don’t pay the correct rate of SG into your employees’ super accounts by the quarterly due date, you will have to pay the Superannuation Guarantee Charge (SGC).
  5. With regards to “when” the rate rise should be applied to your payroll, the rule is that it is applicable to any payments made on or after 1 July 2021 – this is regardless of the period in which the services were performed by the employee.

Managing your Payroll Budget & Cash Flow

Every employer’s obligation to pay superannuation will increase as of 1st July 2021 – there is no escaping this change. This is an increased cost to your business that must be considered for cash flow and budgeting purposes.

With the increases to compulsory super contributions coming out of the same business budget as wages, and all other on-costs such as workers compensation, payroll tax, PAYG and superannuation, you need to be prepared. All future SG increases need to be built into a business budget and cash flow forecast to be considered part of wage increases over time. We recommend that you assess the total employment costs of your business and add a percentage on top of the total costs to cover not just the rise in superannuation, but also any miscellaneous expenses and unforeseen blow-outs. Best practice is that it is better to overestimate than underestimate. Accurate and up-to-date financial records will help a business manage cash flow.

By regularly reviewing your budget and cash flow forecast, you, your bookkeeper, and your Tax Agent can address financial problems immediately. By doing this, you will be empowered to make important and necessary decisions for your business when they are required.

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Superannuation Services Extended

A new legislative instrument has been released which has extended the services BAS Agents can provide to clients in relation to the super guarantee charge (SGC). BAS Agents have been able to assist clients with superannuation tasks for approximately 2 years now, but this instrument allows them to do more and be of greater benefit to clients.

BAS Agents can currently offer superannuation services to clients like processing, advising upon and lodging monthly/quarterly superannuation guarantee data. The Tax Agent Services (Specified BAS Services Services No. 2) Instrument 2020, as it is known, will allow BAS Agents to expand upon these services to include the following tasks in relation to SGC:

  • Act as an authorised contact on behalf of clients with the ATO in relation to SGC accounts, payment arrangements, penalty remissions, super audit and/or review activity;
  • Advising clients when the superannuation guarantee (SGC) charge applies and why;
  • Advising clients about offsetting late payments of superannuation contributions against the SGC;
  • Completing the late payment offset election section of the SGC statement;
  • Acting on behalf of clients in relation to lodging the SGC statement.

The instrument will also allow BAS Agents to view and access superannuation guarantee and SGC accounts in online services.

If you are a BAS Agent and would like to read the detail of the new instrument, here is the link to the Explanatory Statement.

The new legislation means that we can now assist clients with superannuation services on a much higher level and therefore provide more value than before. We have added these new services to our services page where you can also view other services we provide.

If you would like to find out more about the superannuation guarantee charge, go to this ATO webpage.

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