From 1 July 2024, the superannuation guarantee (SG) rate will increase from 11% to 11.5%, increasing the compulsory superannuation payments employers make to their employees.

The 0.5% increment will continue on 1 July each year until it reaches 12% in 2025.

What employers need to do prior to 1 July 2024?

To avoid any negative impact to employees, complete salary reviews before 30 June 2024. Provided the business can support the cost and cashflow, this will ensure the pay increments at least cover the increase to the employee’s cash salary component.

Employees who are packaged on a gross salary plus super arrangement will have no impact on their take home salary. Although, employers need to factor in the additional wages cost for the superannuation increment of 0.5%. This will mean the total wages costs will increase for other on-costs such as payroll tax and WorkCover.

Maximum Contribution Base (MCB)

The MCB will increase to $65,070 per quarter.

MCB is used to determine the maximum limit on any employee’s earnings base for each quarter in the financial year. Employers are not required to make the minimum SG payment for the part of earnings above the MCB.

Concessional contributions

From 1 July 2024, the concessional contributions cap will increase from $27,500 to $30,000, allowing individuals to add more to their super accounts.

Non-concessional contributions

The non-concessional contributions cap will increase from $110,000 per year to $120,000. This change will also affect the bring-forward rule which will increase to up to $360,000 depending on your super balance.

What’s not changing

Superannuation contribution payment due dates remain the same at 28days after the end of each quarter.

The superannuation guarantee charge (SGC) will apply when employers do not pay the SG to their eligible employees’ nominated superannuation fund by the due date.

The contribution quarters are as follows:

How can SW help?

SW has an experienced outsourcing team to assist with your payroll function. We can assist employers understand and become familiar with the new requirements to make this change as easy as possible, while also ensuring employers are meeting compliance requirements.

We can support with :

• Your employment taxes need
• as a registered tax agent we can request your stapled super fund details for employees
• assist in budgeting for these increases.

Contributor

Joshua Teo

The post Superannuation rate increase appeared first on SW Accountants & Advisors.

As part of the 2023-24 Budget, the Federal Government announced that from 1 July 2026, super must be paid on payday, a change that will contribute towards a ‘dignified retirement for all Australians’. 

Treasury has released the Securing Australians’ Superannuation consultation paper (the Paper), which will remain open until November 3, 2023. The Paper provides a number of areas for consultation, including in relation to: 

• defining payday super 
• updating the superannuation guarantee (SG) charge 
• compliance mechanisms 
• choice of fund and employee onboarding 

It is intended that stakeholder answers will help inform the design of payday super implementation and compliance frameworks. 

SW fully supports the intended purpose of the payday super to address the drivers of unpaid SG. Material change is required to systems and processes in employers, clearing houses, superannuation funds and the ATO to deal with increased frequency of contributions (up to 13 times) and tighter deadlines. 

Treasury’s openness to considering a broad spectrum of issues is commendable, with few topics being excluded. If not designed well, there are also numerous aspects of the proposed design which may unduly increase the administrative and regulatory burden on employers. 

SW is preparing a submission to Treasury addressing practical issues for Australian businesses in designing and implementing the payday super frameworks. While there are many matters that deserve consideration, we highlight several key consultation topics below and welcome your insights and feedback: 

• the transition from self-assessment system for SG obligations to ATO-driven recalculations and assessments. 

Employers who have conducted recalculations of pay and super will know that recalculations are rife with false discrepancies. It is proposed that under Payday Super, the ATO will recalculate superannuation obligations based on STP and superannuation fund reporting data. The ATO calculated superannuation shortfalls will result in “nudges” for employers to comply followed by assessments, moving away from the self-assessment system we currently have. 

Is it possible for the ATO to eliminate assessments resulting from false discrepancies, and if so, how might this be done? 

• due date for the making of superannuation contributions or receipt by the superannuation fund. 

Treasury has suggested either deadline based on when payment is made, or one based on receipt by the superannuation fund. 

Superannuation is often a subsequent process to finalisation of a pay run, and can involve significant manual intervention (e.g. in successfully producing and submitting the SAFF file). 

Is a same day due date for payment or a three day deadline for payment into the superannuation fund realistic? If not, how long would employers need to complete processing and comply with deadlines? 

• grace periods for employers to deal with payroll/Payday Super issues that will occur on a more frequent basis (from quarterly to payroll cycle). 

There are many circumstances that arise which can cause superannuation shortfalls, some of which outside the employers control. For example, incorrect superannuation fund details, or paid amounts being reclassified (e.g. an employee incorrectly claims overtime that is re-classified to ordinary pay).  

While proposed improvements in onboarding and superannuation stapling may reduce these instances, the increased frequency and tighter deadlines may result in more SG shortfalls. 

Currently, employers have the quarter and 28 days to correct issues that arise. 

Should there be a grace period which allows employers to correct shortfalls of superannuation? If so, what should be included as a concession in the grace period (interest, admin fees, income tax deductibility, SG calculations)? 

In addition, should the SGC calculation be made easier to assist with the administrative burden of compliance?  

How SW can help

While this has not been made law as of yet, we see a trend of increased transparency and compliance activity from the ATO in respect of superannuation compliance. In anticipation of these trends, or the proposed Payday Super changes, all employers should review the configuration of STP phase two reporting to the ATO as well as end -to -end superannuation processing to reduce the risk of superannuation shortfalls and review activity from the ATO or FWO.  

SW has designed an end to end offering which includes a review of time and attendance / payroll system configuration, and the use of advanced data analytics to test superannuation compliance and reporting to superannuation funds and the ATO.  

If you have any concerns with the proposed reforms or are interested to contribute to SW’s submission, please contact Paul Hum. 

Contributors

Eric Lay

Zainab Ayub

The post Payday Super – Consultation crucial to avoid an administrative and penalty minefield appeared first on SW Accountants & Advisors.

With so much change going on for business, Sharon Burke and Janelle McPhee spent time running through the latest superannuation impacts that all businesses need to know before 1 July 2022.

There were several modifications to superannuation designed to make it easier for people to grow retirement savings and create opportunities for those who are younger, older and low-income earners.

The updated legislation will affect who is required to be paid superannuation, the Super Guarantee (SG) rate and who needs to meet the work test for voluntary contributions. For individuals working casually or working part-time across multiple jobs, they currently may not receive any superannuation contributions at all from employment.

If you missed out on joining us this morning, you can watch our webinar here:

Thank you to everyone who attended, and click here for more events that may be of interest.

Contact us

If you would like help with your superannuation obligations or payroll needs, please reach out for assistance to your key SW advisor.

Expert Speakers

Sharon Burke
Partner, Business and Private Client Advisory
SW 

Janelle McPhee
Associate Director, Business and Private Client Advisory
SW 

The post Superannuation changes 2022/23 webinar appeared first on SW Accountants & Advisors.

A number of changes are being implemented that will affect who is required to be paid superannuation, the Super Guarantee (SG) rate and who needs to meet the work test for voluntary contributions. For individuals working casually or working part-time across multiple jobs, they currently may not receive any superannuation contributions at all from employment.

What is changing?

Currently employers are not required to make superannuation contributions under the superannuation guarantee legislation for employees in receipt of salary and wages of less than $450 in any calendar month.  

From 1 July 2022, the $450 Super Guarantee (SG) threshold will be removed.

Superannuation support must be provided to employees regardless of the level of income they receive in any one month.

Who is excluded from the changes?

Contributions are not required for employees under age 18 who work less than 30 hours per week, regardless of their monthly income, unless they are covered by a workplace agreement that states otherwise. 

There is no change for minors from 1 July 2022.

What should employers do prior to 30 June 2022?

Most payroll procedures and systems are currently configured to exclude superannuation payments for those who earn less than $450 per month.

• Employers should ensure their processes and reporting are robust and capable of meeting Superannuation Guarantee (SG) obligations from the first SG payment cycle after 1 July 2022.

• Employers will need to work with their payroll software provider to update their systems for the changes to ensure they do not inadvertently underpay employee superannuation entitlements from 1 July 2022.

• Employers should ensure that details of each employee’s fund of choice is documented and recorded in the payroll system.

• Ensure you are also able to request stapled super fund details from the ATO. Check and update your access levels of your authorised representatives in your ATO online service (Business Portal). This will ensure you can request employee’s ‘stapled super fund’ details from the ATO.

Other superannuation changes

SG rate

With effect from 1 July 2022, the SG rate will rise to 10.5%.

The SG rate is legislated to continue to increase as follows:

To avoid any negative impact to employees, complete salary reviews before 30 June 2022. Provided the business can support the cost and cashflow, this will ensure the pay increments at least cover the hit to the employee’s cash salary component.

Employees who are packaged on a gross salary plus super arrangement will have no impact on their cash salary, although employers need to factor in the additional wages cost for the superannuation increment of 0.5%. This will mean the total wages costs will increase for other on-costs such as payroll tax and WorkCover.

Removing the work test

The work test will be removed for those aged 67 to 74 for voluntary (member) contributions.

From July 1 2022, individuals aged 67 to 74 will no longer have to meet the work test to make member non-concessional contributions (NCC).

If an individual wants to make a member taxable contribution for those aged 67 to 74, they will need to continue to meet the work test. The work test is working 40 hours for remuneration over a 30-day period, at least once during the year.

What are the penalties for underpaying employees?

An employer who has underpaid the superannuation guarantee for a quarter will be liable for a superannuation guarantee charge (SGC) amount (i.e., the shortfall amount, nominal interest and an administration charge). The ATO can also assess a penalty amount of up to 200% of the SGC.

If there is a possibility that the SG has been underpaid or late payments made, employers should seek to undertake a review and lodge superannuation guarantee charge statements (if necessary) to avoid the possibility of excessive penalties.

How can SW help

• SW has an experienced outsourcing team to assist with your payroll function. We assist employers in understanding and becoming familiar with the new requirements to make this change as easy as possible, while also ensuring employers are meeting compliance requirements
• Our efficient teams are able to quickly review and lodge superannuation guarantee charge statements
• As a registered tax agent, SW can request the stapled super fund details for employees on your behalf
• Our teams regularly assist employers in budgeting for these increases

Contributors

Janelle McPhee

The post Don’t get caught out by upcoming superannuation changes appeared first on SW Accountants & Advisors.

Employers need to start planning now for the change in the superannuation contributions.

Total remuneration package

Where employees are structured on a total remuneration model, employers will need to communicate to staff before 1 July 2021 that their cash salary will decrease to give them time to plan for the change.

For example, if an employee is currently on a total remuneration package of $150,000 (excluding any allowances and non-cash benefits), the current split is:

• Cash gross wages – $136,987
• Super – $13,013

Where the remuneration package is unaltered from 1 July 2021, the split will be amended as follows:

• Cash gross wages – $136,364
• Super – $13,633

Based on the example, the employee will have a reduction in cash gross salary of $623 per annum or $52 per month.

To avoid negative impact to employees, it may be an opportune time to complete salary reviews before 30 June 2021 to ensure the pay increments at least cover the hit to the employee’s cash salary component, provided the business can support the cost and cashflow.

Gross salary plus super

Employees who are packaged on a gross salary plus super arrangement will have no impact on their cash salary, although employers need to factor in the additional wages cost for the superannuation increment of 0.5%. This will mean the total wages costs will increase for other on-costs such as payroll tax, WorkCover.

Maximum Contribution Base (MCB)

The minimum SG superannuation contribution of 10% from 1 July 2021 is also capped to the MCB. The MCB will increase to $58,920 per quarter (FY 2021 $57,090 per quarter). This means the maximum superannuation contribution for an employee earnings more than $235,680 will be $23,568, ($58,920 x 4 = $235,680 x 10%). An employee’s contribution will be limited to the MCB of $23,568 unless the employer chooses to override the MCB cap.

The concessional superannuation cap will also increase from $25,000 to $27,500 for contributions received in FY 2022. This is the first increase in the concessional cap since FY 2017. The concessional superannuation cap covers both employer contributions (including salary sacrificed contributions) and personal contributions claimed as a tax deduction by the member.

How SW can assist

Contact one of our experts below to discuss how the changes to the SG rate may affect your business’ superannuation contributions.

Get in touch

Sharon Burke

E sburke@sw-au.com

Janelle McPhee

E jmcphee@sw-au.com

The post SG minimum to increase 10% from 1 July 2021 – are you ready? appeared first on SW Accountants & Advisors.

Contribution caps

The concessional contributions cap is set to increase to $27,500 (up from $25,000 since 2017-18). As the concessional cap is now only indexed in $2,500 increments, the AWOTE index was (finally) sufficient to trigger an increase for 2021-22.

The non-concessional contributions cap (which is set at 4 times the concessional cap) has increased $110,000 for 2021-22. Under the bring-forward rule you can contribute up to 3 years of NCC i.e. $330,000 (subject to the other eligibility requirements).

The Capital Gains Tax cap amount for non-concessional contributions is $1.615m for 2021-22 (up from $1.565m).

Co-contributions

The government co-contribution “lower income threshold” is $41,112 for 2021-22 (up from $39,837 for 2020-21); “higher income threshold” is $56,112 (up from $54,837).

Super guarantee

While the current super guarantee (SG) rate is already legislated to increase from 9.5% to 10% from 1 July 2021, the “maximum contribution base” will rise to $58,920 per quarter for 2021-22 (up from $57,090 for 2020-21).

An employer is not required to provide the minimum super guarantee support for that part of an employee’s ordinary time earnings (OTE) above the quarterly maximum contribution base (ie $58,920 for 2021-22). This quarterly maximum represents a per annum equivalent of $235,680 for 2021-22).

Super benefits

The following indexed thresholds apply for 2021-22:

• Superannuation lump sum low rate cap – $225,000 (up from $215,000);
• Untaxed plan cap – $1.615m (up from $1.565m);
• ETP cap amount – $225,000 (up from $215,000);
• Genuine redundancy and early retirement payments – tax-free amounts: base amount – $11,341 (up from $10,989); service amount – $5,672 (up from $5,496).

If you have any questions about the above superannuation rates and thresholds for 2021-22, then please contact our office and speak to Iggy Moro.

The post Superannuation rates and thresholds increase from 1 July 2021 appeared first on SW Accountants & Advisors.