Increased Super Who pays?

Tax & Superannuation

By Wisewould Mahony
March 21, 2015

From 1 July 2013, the minimum compulsory superannuation guarantee rate (SG rate) rises from 9% of an employee’s ordinary time earnings to 9.25%.Importantly, this can be an added cost to business for the employer or may be managed as part of the employee’s salary package.

Further annual increases to the SG rate will apply until employers will be required to meet an SG rate of 12% commencing from the 2019 – 2020 financial year. The full timetable of minimum SG rates which will apply from 1 July 2013** is set out below:

Financial Year SG Rate
1 July 2013 – 30 June 2014  –  9.25%
1 July 2014 – 30 June 2015  –  9.5%
1 July 2015 – 30 June 2016  –  10%
1 July 2016 – 30 June 2017  –  10.5%
1 July 2017 – 30 June 2018  –  11%
1 July 2018 – 30 July 2019   –  11.5%
1 July 2019 – 30 June 2020  –  12%

**Note: the Coalition have proposed freezing the super guarantee at 9.25% for 2 years.

Employer superannuation contributions are payable by the employer. However, the Superannuation Guarantee (Administration) Amendment Act 2012, which commences from 1 July 2013, does not deal with offsetting or absorbing the cost of the annual increases to the SG rate.

The ability of employers to offset or absorb the increases to the SG rate will depend on the applicable employment contract, Award and/or enterprise agreement.

Accordingly, employers should review their standard employment contracts to ensure they are suitably worded to enable the offset or absorption of the SG rate increases.

Do your Employment Contracts and Procedures need to be amended?
The upcoming increases to the SG rate provide an opportunity for employers to ensure their standard employment contracts and procedures are updated to reflect the changes so as to ensure there will be no increase to the employees’ total cost to their employers.

At the same time, employers should review their standard employment agreements and HR policies to ensure they remain compliant with the Fair Work Act 2009 (Cth), the National Employment Standards and to ensure that they reflect best practice.

Please contact our Employment and Workplace Relations team if you require assistance with the upcoming changes to superannuation and/or with reviewing and amending your standard employment documentation.