1 July 2022 Superannuation Guarantee tips for employers and employees.

Superannuation Guarantee is the percentage set by the Government that employers are mandated to contribute to their employees’ super funds.

Superannuation Guarantee is referred to as SG and is considered a Concessional Contribution which currently has an annual cap of $27,500.

If your SG is part of your total remuneration package your employer can reduce your take home pay by the 0.5% SG increase.

Employer tips:

• Increase SG contributions to 10.5% of an employee’s Ordinary Times Earning (increases from 10% from 1 July 2022).
• If SG is paid in July for work done in June the SG must be paid at the new rate!
• Make the contributions by the quarterly due date (28^th day of Jan, Apr, Jul and Oct)
• Do not contribute SG over the maximum super contribution base per quarter, this is the first $60,220 ($240,880 pa). At 10.5% this is $6,323 per quarter.
• Since 1 January 2020 employers can not reduce their SG obligations by the amount a employee elects to salary sacrifice.
• Temporary residents are also entitled to SG payments (although they can claim the balance of the super fund when they leave Australia).
• Check the ATO SG eligibility tool if you are unsure whether your employees are eligible for SG.
• Employees under 18 are eligible for SG if they work more than 30 hours per week.
• Give new employees without an existing super fund a choice form within 28 days of commencement and warn them that if no election is made the SG will go to your default fund.
• From November 2021 new employees must have SG paid to their existing super fund which is referred to as their stapled super fund. If they haven’t given you their super fund details contribute to your default fund.

Employee tips;

• High income earners with more than one job can opt out of receiving SG from an employer to ensure they don’t receive more SG than the $27,500 Concessional Contribution cap.
• Additional contributions to super can be made as a salary sacrifice where you request your employer to make additional before tax contributions up to the concessional contributions cap. Or if you prefer to wait until later in the financial year to determine the amount you can afford to contribute an ad-hoc contribution can be made directly from your bank account to the super fund and then claimed as a tax deduction.
• If you have less than $500,000 in super on 30 June the previous year you can make carry forward contributions to make up any unused concessional contribution caps from the previous five years.
• There is little point making additional concessional contributions to super if your taxable income is less than $18,200 as you will pay a higher tax on the income when contributed to super (15%) than at your marginal tax rate (0%).
• Remember that you lose access to your capital invested into super until you meet a condition of release which is generally age 60 and retirement or age 65 if still working.
• You can choose the level of risk when contributing to super, from cash through to shares. Thinking markets are about to fall should not stop you taking advantage of the tax benefits that super can provide.
• Check when your fund receives the contributions as it is counted by the super fund when received not when paid by the employer. If it falls into the next financial year the amount will count towards that year’s cap.