With the end of financial year (EOFY) 2022 just around the corner, it’s crucial for business owners to know about soon-to-be-implemented changes in Australian super funds.
Come 1 July, companies need to be prepared to address superannuation guarantee (SG) modifications to ensure they remain compliant.
Super Guarantee Changes
Beginning 1 July 2022, the superannuation guarantee will increase to 10.5 per cent. It must be noted that since 1 July 2021, the SG was already set at 10 per cent, and under the current timetable of mandated increases, the percentage rate will rise to 11 per cent on 1 July 2023. The superannuation guarantee will continue to rise at a pace of 0.5 per cent per year until 1 July 2025, when it will have reached its final rate of 12 per cent.
Additionally, the $450 monthly earning threshold will be eliminated, allowing all employees to receive the SG contribution regardless of their earnings. This could mean paying the superannuation guarantee to some employees for the first time. These SG changes also apply to self-managed super funds.
Employees who were previously not eligible for super under the $450 threshold are required to provide their employer with a nominated super fund. This super fund account, once activated, will remain attached to all future changes in their employment.
Staff below the age of 18 who work less than 30 hours per week are not eligible for superannuation.
In line with these developments, businesses would need to update their payroll software to compute the superannuation guarantee entitlement accurately.
The penalty for late or wrong super payments can be quite severe, so companies should act now to ensure that their systems are up to date before 1 July.
Other EOFY Tasks
The end of financial year in Australia also signals the need for businesses to stay on top of and finish bookkeeping tasks, file tax returns, and make plans for the coming year.
A checklist prepared by business.gov.au is available to assist firms in preparing and organising for EOFY. These include:
- Checking what documentation work and related tasks need to be done
- Identifying what tax breaks and exemptions you are eligible for
- Verifying that your tax agent or preparer is licensed
- Keeping up with the latest tax developments
- Steering clear of scams involving tax refunds
- Assessing your financial situation
- Examining your business and marketing strategies
- Reviewing your company structure
- Checking your insurance policies
- Backing up and protecting business data
The clock’s ticking.
Get all crucial tasks done now to avoid unnecessary stress and penalties come 1 July.
If this article has inspired you to think about your own unique situation and, importantly, what you and your family are going through right now, please contact your advice professional.