From 1 July 2021, the minimum rate of Superannuation Guarantee (SG) increased from 9.5% to 10%. The rate will increase incrementally by half a percentage point each year, up to 12% on 1 July 2025.
The change comes under the 2021-22 Federal Budget and aims to assist Australians in getting more savings into their retirement funds.
What does this mean for employers?
Employers need to consider how the rate changes will affect employee remuneration packages. For example, where an employee has their remuneration packaged to include superannuation, and they aren’t getting a corresponding pay rise at 1 July, their take home pay could reduce because their superannuation will make up a larger proportion of their package.
If you use an up to date payroll system that complies with Single Touch Payroll, these changes will be relatively simple to comply with as your program may automatically adjust for the rate change. Some programs will require a software update in order to automatically adjust these changes.
Business owners should ensure they are compliant with the change as non-payment, underpayment and late payments of as little as 24 hours are likely to attract attention and penalties from the Australian Taxation Office (ATO).
Updating your cloud accounting software
To ensure your payroll reflects the increase in SG, it is important that you determine whether any action is needed to update your cloud accounting software.
The SG changes will be automatically updated in Xero and clients are not required to take any further action.
Users of MYOB are required to manually update their system to ensure the SG increase is reflected in their payroll. MYOB have released a full instruction guide on how to perform this update. To view the instructions, click here.
New tax tables for the 2021/2022 financial year have been released and will automatically apply to all pay runs with a pay date on or after 1 July 2021. You do not need to do anything to begin using these new tax tables.
Users of Reckon are required to perform a manual update for their software.
This update will ensure SG is paid at the correct rate of 10% and will update the tax tables within the system. To do the update, click here.
To perform the update, clients need to have installed Reckon 2021 which can be found here. If you currently use Reckon Accounts Hosted, you will need to upgrade to Reckon Accounts Hosted 2021. Click here to view instructions on how to perform this upgrade.
If you have any questions regarding the SG increase or would like assistance updating your accounting software to reflect the increase, please give us a call on 03 5443 0344 or email email@example.com