There are several key legislative changes coming into place on 1 July 2022. Read below to find out what they are and how best to plan the rollout of changes for your business.
Superannuation Guarantee Increase
Superannuation Guarantee is the minimum amount of superannuation employers pay. On 1 July 2022, the Superannuation Guarantee rate is scheduled to increase from 10% p.a. to 10.5% p.a. Employers are encouraged to communicate these changes to employees, particularly where their employment package includes superannuation, as there will be implications for take home pay.
What you need to do:
- You’ll need to use the new rate to calculate super on payments you make to employees on or after 1 July, even if some or all the pay period is for work done before 1 July.
- Make sure you update your payroll and accounting systems so that you continue to pay the right amount of super for your employees.
Minimum Wage and Award Wage Increase
The Fair Work Commission recently announced wage increases to both the national minimum wage and the modern awards. The minimum wage will increase by 5.2% and modern awards will increase by 4.6%. For most industries under modern awards, this change will take effect from the first full pay period after 1 July 2022.
What this means for employers:
- Employers need to review their wage arrangements and implement the necessary wage increases to ensure minimum wage rates are proportionate with the modern award.
- Employers paying above-award should review these arrangements to ensure that they are high enough to align with the increase
Removal Of The $450 Per Month Income Threshold For Super Contributions
Legislation will come into effect on 1 July 2022 that removes the $450 per month income threshold that employees currently need to earn to be paid the superannuation guarantee by their employer. This means that from 1 July 2022, all employees can be eligible for super guarantee, regardless of how much they earn.
What this means for employers:
- From 1 July 2022, you will need to pay super for your employees who are under 18 years old if they work more than 30 hours a week.
- All other employees over 18 will be entitled to superannuation, regardless of their monthly income.
- As we move closer to 1 July 2022, check your payroll and accounting systems have been updated so you can correctly calculate your employees’ super guarantee payments.
As an employer, you will also need to confirm that you have the correct super information on file for all employees, so payments are made to the correct fund. You will also need to offer all eligible employees a choice of a super fund.
Remember, you may have to check for an employee’s ‘stapled’ super account they do not choose a fund, rather than setting them up in your default fund. Go to the ATO Website for more information on stapled super funds.
Removing The Work Test For People Aged 67 To 75
From 1 July 2022, the work test for personal (non-concessional) and salary sacrifice contributions to super for those aged 67 to 75 will be removed. Existing annual concessional and non-concessional caps will continue to apply, although the change will allow people under age 75 to use the non-concessional bring-forward rule (which currently concludes at age 67). This increases flexibility for older Australians to save for their retirement through superannuation.
What this means:
- Fund trustees will no longer have to administer the work test at the time they accept the contribution.
- Those aged 67 to 74 will still need to meet the work test if they wish to claim a personal superannuation deduction for their contribution.
If you have further questions regarding the above points, please contact the office via email or phone 07 5451 1118.