As part of the 2021-22 Federal Budget, the Australian Government announced that it would remove the $450 per month threshold currently in place for employees. This change expands the coverage of the Super Guarantee to eligible employees, regardless of their monthly pay.
Employers should note that this change is now law and from the 1st July 2022 employers will be required to make super guarantee contributions to their eligible employee’s superfunds on every dollar earned.
Who is an eligible employee?
Generally, all employees are eligible for super. The definition of an employee includes:
- Full time, part time or casual workers;
- Receiving a super pension or annuity while working (including employees on transition to retirement);
- A temporary resident, such as a backpacker or a working holiday maker;
- A Company Director; and
- A family member working in the business.
However, the following are the exceptions to this rule:
- Under 18 years old and working less than 30 hours per week;
- Domestic or private worker and works less than 30 hours per week IE: nanny, housekeeper or carer;
- Non-resident employees who work outside Australia;
- Employees temporarily working in Australia who are covered by a bilateral super agreement;
- Self employed as a Sole Trader or in a Partnership; and
- High income earners working for multiple employers who ask you not to pay super for them – in this case you must have a SG employer shortfall exemption certificate for the employee.
What do you have to do?
Most payroll software providers will update their software to remove the $450 threshold from the superannuation calculation setting. All you will have to do in this case is double check that this has happened, and continue to process payroll as normal, then pay the super that your system calculates.
If your software provider does not remove the threshold, from 1 July 2022 you will have to manually make that adjustment in the payroll settings. As all systems are different, please contact your software provider for instructions on how to do that or contact us here at Davidsons for assistance.
As always, we are here to help you. If you need assistance with your superannuation obligations, or you would like to speak with one of our payroll specialists, please contact us at (03) 5221 6399 or at firstname.lastname@example.org.
Would you like to stay up to date on the latest accounting information impacting businesses from Geelong and the Surfcoast? Sign up for our monthly newsletter ‘The General Account’ here.
Disclaimer: This information is of a general nature and should not be viewed as representing financial advice. Users of this information are encouraged to seek further advice if they are unclear as to the meaning of anything contained in this article. Davidsons accepts no responsibility for any loss suffered as a result of any party using or relying on this article.
This article was written by Davidsons Bookkeeper Leanne Hamer.