The Super Guarantee Changes on 1 July: Key things you need to know

As the new Financial Year fast approaches, it is important to note the Superannuation Guarantee (SG) is increasing from 10.5% to 12.0% in 0.5% increments from 2023 through to 2025. The next increase, from 10.5% to 11%, is due to take effect on July 1 this year.

Year Superannuation Percentage
Year starting 1 July 2023 11.0%
Year starting 1 July 2024 11.5%
Year starting 1 July 2025 12.0%

This increase will require employers to contribute an additional 0.5% to meet their SG obligations under the Superannuation Guarantee (Administration) Act 1992 (Cth) (SGAA). In a number of instances employers may have a difficult decision to make. Where the employees’ contract states the remuneration is inclusive of superannuation, the employer may choose to absorb the superannuation guarantee increase into the remuneration package without any increase in the total package. This will, in turn, reduce the employees’ take home pay. Alternatively, the employer may choose to pay the 0.5% superannuation guarantee in addition to the inclusive remuneration package, thus maintaining the employees take home pay.

For those employees paid on a “base plus” remuneration model, where superannuation is paid on top of a specified salary, the employer will need to pay the additional 0.5% superannuation on top of the employees’ specified remuneration package thereby not reducing the employees take home pay.

It is important to note the rate of 11% will need to be applied for all salary and wages that are paid on and after 1 July 2023, even if some or all of the pay period it relates to is before 1 July 2023.

If you haven’t already, you should start planning how this SG increase will be implemented and communicated, which will depend on each employees remuneration structure as detailed above.

As usual, should you have any questions or need any help with Superannuation obligations, please reach out to our team and we will endeavour to do our best to assist.

 The Team at Rose Partners

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