From 1 July 2021, we can expect to see some changes to super in Australia that will affect all employers. If you’re an employer, this one’s for you. Employers, no matter who, what or where in Australia will be affected by changes to super – and it’s important you get it right. We know it can be hard to stay on top of changes to employment law – but that’s where we come in. We’ve put together this article to help you navigate the changes so you can be confident you’re compliant as we enter the new financial year. Ready to jump in and get prepared for the changes heading your way? Let’s get to it. Disclaimer: While due care has been taken in preparing this article, no responsibility is accepted by the author for the accuracy or suitability of the information contained. All liability is expressly disclaimed for any loss or damage which may arise from any person relying on, using or acting on any information contained therein. If you are unsure about how this information applies to your specific situation please seek expert advice or contact Employment Innovations.
Defaulting employees into your company super fund is a no-no
This is one of the most important changes affecting employers and their new employees super, effective 1November 2021. This change is known as ‘stapling’, whereby employees with existing super funds are effectively stapled to you no matter what job or role you move to. During the onboarding process, it’s important you take note of which super fund the employee has nominated to use. If a new employee specifies which super fund they’d like to nominate as their preferred account, you are required to pay into this account. Employees who wish to change to a different super fund have to actively nominate it and let their employer know via the Standard Choice Form. If a new employee doesn’t specify which super fund they’d like to use, it is your responsibility to contact the ATO and find their ‘stapled’ fund from their previous employment. If they have a ‘stapled’ account, you must pay their super into this account. If the new employee does not have a ‘stapled’ account, nor specifies which super account they’d like to use, you are permitted to set up an account for them with your organisation’s nominated superannuation fund. Employment Hero’s paperless onboarding function already complies with the current super stapling requirements. This is because new starters engage in ‘choice’ by nominating their preferred super fund, or choosing to create a new fund if they don’t already have one; they don’t have the option to auto-default into a new fund.
Super guarantee scheduled to increase
On 1 July 2021, the Super Guarantee is set to rise from 9.5% to 10%. As an employer, this means you’ll have to adjust your payroll systems to cater for the rise across your business. It’s important you’re aware and prepared for this change to ensure your systems are correct from the very start.
What happens if you fail to increase the Super Guarantee in your organisation?
If you fail to increase the Super Guarantee (SG) for your employees to 10% by the quarterly due date, it’s likely you’ll have to pay the Superannuation Guarantee Charge (SGC). This is a penalty from the ATO for incorrect or late payments for your employees. If you’re directed to pay the SGC, you’ll not only have to pay the SG amounts owing, but also interest and an additional administration fee. For more information on super for employers, we suggest visiting the ATO website or getting in touch with Employment Innovations for tailored advice.
Increase to the superannuation contribution caps
From 1 July 2021, the superannuation contribution caps are set to increase.
Concessional contribution cap
Currently, the concessional cap is $25,000. From 1 July 2021 this will increase to $27,500. You can find more information on the concessional contribution cap here.
Non-concessional contribution cap
Currently, the annual non-concessional cap is $100,000. From 1 July 2021, this will increase to $110,000. You can find more information on the non-concessional contribution cap here.
Maximum non-concessional contribution cap
Currently, the maximum non-concessional cap (bring-forward) is $300,000. From 1 July 2021, this will increase to $330,000. Please be aware that some conditions apply to these changes to super. For more information on superannuation contribution caps, please visit the ATO website.
Changes to electronic payroll reporting
We all know about Single Touch Payroll (STP). It helps with employer reporting obligations for payroll information including salaries, PAYG withholding and superannuation. If you’re an employer with more than 20 employees, you would have started using STP back in 2018. From 1 July 2021, all employers are required to use STP and report their payroll information digitally. On 1 January 2022, Phase 2 of STP is set to be rolled out. This will further streamline reporting burdens for employers who need to report information to multiple government agencies. You can learn more about Single Touch Payroll (Phase 2) here.
Getting prepared for EOFY? We’ve put together a bundle to help your wrap up this financial year and get prepared for the next.
Confused about electronic reporting? Let us help.
Does all of this talk about superannuation have you feeling overwhelmed and confused? We don’t blame you -it’s some tricky business. But that’s where Employment Hero can help. Our purpose-built payroll system automatically updates when changes to super occur. It can give you peace of mind knowing that your payroll software is always up to date and in line with local employment laws. Employment Hero Payroll integrates with some of the most popular apps out there including Xero, QuickBooks, MYOB and more. If you’re looking for an HR and payroll solution, let us help. One of our small business specialists can walk you through how you can get the most out of our end-to-end employment and payroll software. Get in touch today.
Want more? Take a look at our guide to compliance.