Superannuation changes (2022): What businesses should know

In 2022, we can expect to see some changes to super in Australia that will affect all employers. Employers, no matter who, what or where in Australia will be affected by changes to super – and it’s important you get it right or face the harsh penalties that come with unpaid super.Don’t make this super mistake. Unpaid super has big consequences both for your business and you personally.

We’ll recap the changes to super from 2021 and get you up to speed with what’s in store for this year.

We’ve put together this article to help you navigate the changes so you can be confident as we enter the new financial year

Ready to get prepared for the changes heading your way? Let’s get to it.

Disclaimer: The information in this article is current as at 3 June 2022, and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related bodies corporate (Employment Hero). The views expressed in this article are general information only, are provided in good faith to assist employers and their employees, and should not be relied on as professional advice. The Information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising either directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your own research and to seek professional advice before making any decisions or relying on the information in this article. 

A recap of changes to super in 2021

The introduction of super stapling

On 1 November, 2021, we saw an important change come into effect. This change is known as ‘super stapling’, whereby employees with existing super accounts are effectively stapled to you no matter what job or role you move to. For a comprehensive guide on super stapling, check out our Super Stapling Guide for Employers in Australia.

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 account 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.

Did you know that Employment Hero’s payroll software 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.

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Increases to the superannuation contribution caps

On 1 July 2021, the superannuation contribution caps increased.

Concessional contribution cap

On 1 July 2021, the concessional cap increased from $25,000 to $27,500. You can find more information on the concessional contribution cap here.

Non-concessional contribution cap

On 1 July 2021, the non-concessional cap increased from $100,000 to $110,000. You can find more information on the non-concessional contribution cap here.

Maximum non-concessional contribution cap

On 1 July 2021, the non-concessional cap (bring forward rule) increased from $300,000 to $330,000. Please be aware that some conditions apply to these changes to super. For further 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. Now, all employers are required to use STP and report their payroll information digitally.

On 1 January 2022, Phase 2 of STP was rolled out. This further streamlined reporting burdens for employers who need to report information to multiple government agencies.

What will happen to superannuation in 2022?

In 2022, we can expect to see some new changes to superannuation. These include increases to the existing superannuation guarantee (SG), as well as the removal of some existing tests and caps on super.

Changes to superannuation contributions in 2022

Does the superannuation guarantee increase on 1 July 2022?

Yes. On 1 July 2022, the super guarantee rate will increase from 10% to 10.5%. This increase is designed to create a better retirement for all Australians.

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.

Employment Hero can help you manage the increased rate of super. Contact us today to learn how. 

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 10.5% 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 further information on super for employers, we suggest visiting the ATO website.

The work test for people aged between 67-74 will be abolished

On 1 July 2022, the work test for people aged between 67 – 74 is set to be abolished.

Under the current work test, you must be employed for a minimum of 40 hours in a consecutive 30-day period during the financial year. This work test determines whether you can make super contributions – either before or after-tax.

Now, Australians aged under 75 will no longer have to meet the work test to make contributions to their superannuation, especially as life expectancy increases.

For more information, visit the ATO website.

The $450 monthly income threshold will be removed

From July 1 July 2022, employees earning below $450 per month will be entitled to receive the superannuation guarantee from their employer if they satisfy the eligibility criteria.

This means that all workers, regardless of how much they earn, will be entitled to receive superannuation payments from their employer. This will help those who work casually or part-time to boost their retirement savings.

Please note: Contribution age limits are in place. Those under the age of 18 will need to work over 30 hours before they are eligible for superannuation payments (unless they are covered by a workplace agreement that lists otherwise).

Key changes to super summary

Let’s recap the super changes you need to be across in 2022.

• The super guarantee will increase from 10% to 10.5% on 1 July 2022.
• STP Phase 2 has now been rolled out
• The concessional, non-concessional and maximum non-concessional super cap have been increased
• Super stapling is now in effect
• The work test for those aged 67 – 74 will be abolished on 1 July 2022
• The $450 monthly taxable income threshold will be removed on 1 July 2022

Confused about electronic reporting? For an ultimate guide to Single Touch Payroll (STP), check out our detailed article here: The Ultimate Guide to Single Touch Payroll.

Confused about electronic reporting?

Does all of this talk about superannuation make you feel overwhelmed and confused? We don’t blame you – it’s some tricky business. But that’s where Employment Hero can help. Our HR and payroll are STP compliant.

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.

Is your employee asking for an income statement? You don’t need one with STP in place.

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 to learn more about our payroll software.

Want to know all things payroll? Read more:

• Why businesses need to start bookkeeping
• Signs you should hire an accountant
• In-house vs outsourced payroll services
• Payroll scandals in Australia
• Payroll tax obligations for interstate employees 
• Guide to paying staff correctly

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