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From 1 July 2021, the superannuation guarantee (SG) rate increased from 9.5% to 10%. The SG rate will progressively increase as follows until it reaches 12% on 1 July 2025:

What does this mean for employers?

Employers will need to adjust payroll systems to pay the increased SG rate to eligible employees before processing the first pay of the 2021 financial year. If employer’s fail to increase the SG rate or pay the required SG amount by the quarterly due date, they will be liable to pay the super guarantee charge (SGC) and lodge an SGC statement. This will involve paying an amount of super guarantee shortfall, interest and administration fees. It also then means the amount required to be paid is non-tax deductible.

It is therefore critical employers update their systems and/or seek appropriate employment law advice to confirm their obligations.

To assist the accounting and payroll processing, we have below summarised the requirements for some of the common payroll systems with handy links. For any other payroll software not listed below, ensure to check whether the SG rate will increase automatically or will need to be manually.

Xero

• If the employee’s pay templates are set up correctly (Contribution Type as Superannuation Guarantee Contribution and Calculation Type as Statutory Rate), the SG rate will update automatically.
• Updates to superannuation guarantee contributions (xero.com)

MYOB (MYOB AccountRight & MYOB Essentials)

• If your MYOB file was created before 1 July 2021, the SG rate will need to be updated manually.
• Updating super guarantee in MYOB AccountRight
• Updating super guarantee in MYOB Essentials
• Updating super guarantee in MYOB Essentials (New)

QuickBooks

• A setting should be automatically activated which updates SG rates automatically. To check this setting is activated, go to Payroll Settings > Details and ensuring the box is checked for Automatically Update Super Rates.

Reckon Accounts & Accounts Hosted

• If the file is upgraded to the latest Reckon software (2021 R2 release), the SG rate will update automatically.
• Superannuation Guarantee Increase to 10% — Reckon Community

Reckon Accounts Premier & Payroll Premier

• For Reckon Accounts Premier files, the SG rate will need to be updated manually.

What super rate to use for pays that span different payroll years?

If you are processing a pay that includes dates covering June and July, the effective rate is based on the payroll payment date i.e. if payment date is prior to 30 June 2021, the SG percentage is 9.5%, if it is 1 July 2021 or later, the SG percentage is 10%.

Single touch payroll – removal of exemption for closely held payees

From 1 July 2021, employers are no long able to rely on the exemption for closely held payees. This broadly means all employers, regardless of size and payee type need to comply with Single Touch Payroll obligations.

For more information please refer to the ATO. Similarly, feel free to contact us to discuss your Single Touch Payroll eligible software options.
Closely held payees | Australian Taxation Office (ato.gov.au)

Should you have any questions or require any assistance in relation to the Superannuation Guarantee rate increase, please don’t hesitate to contact our office on (07) 5556 3300 or info@wmssolutions.com.au.

DISCLAIMER: This article is intended to provide a general summary only and should not be relied on as a substitute for professional advice.