The Superannuation Guarantee (SG) increase is set to go ahead. However, we advise business owners to ensure that they understand the changes that are progressively being rolled out over the coming years and prepare for them to avoid penalties.
From July 1st, 2021, the base rate is set to rise from 9.5% to 10%, and this will be followed by incremental half per cent increases until the base rate sits at 12%, beginning July 1st, 2025.
Since late payments, underpayments or non-payments will attract the attention and potential penalties from ATO, in as little as 24 hours, it is best to have practises put in place as early as possible to ensure that your business isn’t red-flagged.
We understand that, in general, businesses operate in the interest of their bottom line. However, what is essential during this change is that you are transparent with your employees about how it will affect their take-home pay from month to month. Whether you as a business are looking to meet the total cost of the superannuation guarantee increases over the coming years or leave your employees to bear the brunt of the change within their pay packages, we implore you to be transparent about these changes and the impact that it will have on your business and those who work within it.
The superannuation guarantee, although legislated for some time, was still up in the air as late as March this year due to the precise impact that it will potentially have on wage growth in the country and the impact on employers and their profit margins. Larger profit margins generally result in business growth, which enables job opportunities within the community. The extra 0.5% yearly increase is likely to come at the cost of reduced wage growth and new jobs in the market over the coming years.
Since this is not a once-off payment, rather an incremental change spanning several years that will ultimately impact profit margins, it is imperative that we include the SG increase into forecasting models to allow you to properly budget, especially if you are a business that has a large workforce.
Should you wish to discuss these or any other considerations regarding the superannuation guarantee increases, then get in touch with one of team here at Glance Consultants on 03 98859793 or at enquiries@
Our office located at 217A High Street, Ashburton VIC 3147 is open Monday to Friday 9:00am – 5:00pm and Saturdays: by appointment only.
