From 1 July 2022, two important super guarantee (SG) changes will apply to businesses. These are:
- The rate of SG is increasing from 10% to 10.50%
- The $450 per month eligibility threshold for when SG is paid is being removed
What this means for you
These changes mean that from 1 July 2022:
- You’ll need to make SG contributions at the new rate of 10.5%
- Employees can be eligible for SG, regardless of how much they earn. You may have to pay SG for the first time for some or all of your employees.
Software providers such as Xero and MYOB will have their payroll software updated in time.
What you need to do
Check that your software is updated to correctly calculate your employees’ SG entitlement from 1 July 2022.
If the removal of the $450 threshold means you’ll be paying SG for one or more employees for the first time, you’ll need to give them a Standard Choice Form.
If your employee does not provide you with a choice of super fund, review the Stapled Super Fund information on the ATO website or speak to your usual Quantiphy contact for guidance on what you need to do next. A stapled super fund is an existing super account linked to an individual employee.
Concessional super contributions to be made prior to 30 June 2022
Concessional contributions are contributions that are made into your super fund before tax. They are taxed at a rate of 15% in your super fund.
From 1 July 2021, the concessional contributions cap is $27,500. The increase for the current year from $25,000 which was the cap for the 2018 to 2021 financial years is a result of indexation in line with average weekly ordinary time earnings (AWOTE).
Please also note your concessional cap may be higher if you did not use the full amount of your cap in earlier years. This is called the carry-forward of unused concessional contributions.
To use your unused cap you need to meet 2 conditions:
- your total super balance at the end of 30 June of the previous financial year is less than $500,000
- you made concessional contributions in the financial year that exceeded your general concessional contributions cap.
The amount of unused cap amounts you can carry forward will depend on the amount you have contributed in previous years, starting from 2018–19. You can use caps from up to 5 previous financial years, including when you were not a member of a super fund.
If you are considering using your carry forward unused cap for the current year (i.e. before 30 June 2022) we suggest you confirm your eligibility with us or your financial advisor.
This is a good tax minimisation strategy if you are seeking to minimise your personal tax exposure for the current financial year.
