Employers - SGC changes from 1 July 2022

SGC rate increases to 10.5%

The SGC rate increases to 10.5% of Ordinary Times Earnings, and is payable on all payments made from 1 July 2022 (even if the work was done prior to that date). th rate rises again to 11% on 1 July 2023.


Now you must pay super for all employees

Previously, employers did not have to pay superannuation to employees who earned less than $450 per month. As a result, those part-timers, casuals, apprentices and workers younger than 18 working a few hours only, who earned less than the $450 threshold, missed out on receiving any super contributions.


For employees under 18 years of age, if they work more than 30 hours per week, you must pay super for them, regardless of how much you pay them.


$450 threshold removed

On 11 May 2021, as part of the 2021–22 federal Budget, the Australian Government announced it will remove the $450 (before tax) per month threshold. That change will take effect from 1 July 2022.


The removal of the threshold means that from 1 July 2022, employers will be required to make super guarantee contributions (now 10.5%) to their eligible employee's super fund regardless of how much the employee is paid.


Contractors

This change effects other workers who are eligible for super, including contractors. From 1 July 2022, if you pay a contractor mainly for their labour, you will need to pay super regardless of how much you pay them. This is the case even if they quote an Australian business number (ABN).


Self Employed

If you're self-employed as a sole trader or in a partnership, you do not have to pay super guarantee for yourself.


Watch out for payments that straddle year end

The 30 June 2022 is a Thursday. An employee's eligibility for super guarantee is determined when they are paid salary and wages, not when the income is earned. This means if you pay an eligible employee on or after 1 July 2022, you will need to pay their super regardless of how much they have earned, even if some of the pay period it relates to is before 1 July 2022.


Software

Employers will need to check their payroll and accounting systems have been updated for super payments made after 1 July 2022 to ensure they correctly calculate their employee’s super guarantee entitlement, both for the contribution rate increase to 10.5% and the removal of the $450 threshold.


If you need any help handling the change, please ring Noel, Amanda or Ryan on 03 9585 7555 or email us on

enquiries@mktax.com.au