Superannuation Guarantee rate increases to 10% on 1 July 2021

On 1 July 2021, the super guarantee (SG) rate will increase from 9.5% to 10%. The rate is scheduled to gradually increase by increments of 0.5% until it reaches 12% in July 2025.

What do employers need to do?

Employers need to ensure their payroll settings are updated to reflect the new SG rate of 10% in time for 1 July 2021. The new SG rate will apply to the ordinary time earnings (OTE) of an eligible employee.

Impact on employers and employees

For most employees, the SG increase will not affect their base salary, as SG is paid in addition.

For example, if you have an employee on an annual salary of $80,000, you will currently be paying $7,600 into their super fund each year. This amount will increase to $8,000 from 1 July 2021, while their annual base salary will remain at $80,000.

Additionally, if an employee is making salary sacrifice contributions to super, the salary sacrificed amount cannot be used to meet your SG obligation.

Importantly, where you have an employee who is on a super-inclusive salary package, their take home pay may be impacted (i.e. redirection of a portion of their take home pay to their super) if you choose to maintain the package at the current level. You should communicate any impact of this with your employee.

Employers will also need to consider the potential impact on relevant employee awards.

Maximum super contribution base

The maximum super contribution base will increase to $58,920 per quarter ($235,680 per annum) for 2021/22 financial year. Employers are not obligated to pay SG on an individual’s earnings above this limit.

For more information on these rules and thresholds, visit the ATO website.

Concessional contributions cap increase

From 1 July 2021, the annual concessional contributions cap will increase from $25,000 to $27,500. Additional concessional contributions may be made by members who have an unused concessional cap carry forward or who are contributing to replace a COVID-19 early release withdrawal. Concessional contributions made beyond this amount may attract higher tax rates. Concessional contributions include SG, salary sacrifice, and personal contributions for which a tax deduction has been claimed.

Need help?

We’re here to help you understand the new rules and your obligations. You can contact our dedicated customer relationship team or call the helpline on 1300 133 177, Monday to Friday, 8am–8pm (AEST/AEDT).