If your business employs staff in Australia, you will be aware employment brings with it a multitude of compliance tasks related to taxation and superannuation. This year, due to a change of government and a newly delivered Federal Budget, the finer details of these compliance areas have changed. The area most affected is that of the Superannuation Guarantee (SG). The SG has received one giant makeover and if you are an employer, it’s important that you are across all of the changes. This blog outlines these changes.
Superannuation Rate Increases
The first change relates to the rate of Superannuation Guarantee (SG). SG is the official term for compulsory superannuation contributions made by employers on behalf of their employees. Prior to 1 July 2014, SG was calculated at a rate of 9.25%. This rate has now increased to 9.5% and applies to all wages paid from 1 July 2014. The result of legislation recently passed by Federal Parliament is that this rate will remain firm until 30 June 2021. The rate will again increase from 1 July 2021 to 10% and will continue to increase to 12% on 1 July 2025. These increases are shown in the table below:
|Financial Year||Rate (%)|
|2025 and onwards||12.0|
SuperStream Data & Payment Standard
A new superannuation payments standard has arrived. It’s called SuperStream. The payment standard is designed to make paying super contributions and supplying related data to super funds, easier for employers. SuperStream will benefit employers by:
- providing a simple and consistent process
- lowering overall processing costs to employers
- reducing the number of lost accounts and unclaimed super
- ensuring employees’ money is processed more quickly into their super accounts
Currently, if you’re an employer, you’ll be more than aware of the complexities of paying SGC each month or quarter. If you have several employees who have nominated their own funds, these complexities are magnified due to the fact that you will have many different funds with which to deal, all with their own payment and data requirements. The whole process can be very time-consuming.
SuperStream aims to make the super payment process easier by implementing one standard to which all super funds adhere. Hopefully it will reduce the red tape for many employers.
From 1 July 2014, all businesses with 20 or more staff must use the new SuperStream payment standard or at least be preparing to use the standard. To help you, the ATO has written an article about Super Stream which you can view here (includes various videos too). They have also prepared a nifty checklist to help you prepare your business for SuperStream.
If you’re an employer of 19 or fewer staff, you will also need to get ready for SuperStream but not until July 1 2015 – you get extra time! The perfect solution for you would be to start using the government’s Small Business Superannuation Clearing House. The use of the clearing house would more than cover you in terms of complying with the new SuperStream requirements.
The main thing to remember is that SuperStream IS NOT OPTIONAL – every business paying super contributions on behalf of employees must start using the SuperStream Standard by the given due dates above.
These changes to superannuation guarantee are designed to improve the system overall and to make the lives of employers much easier – let’s hope the intentions of those responsible become a reality!