The new financial year, starting July 1st, 2024, brings a change for Australian businesses with employees. There’s a mandatory increase in the Superannuation Guarantee (SG) contribution you make for your employees. This means you’ll be contributing a larger portion of their salary towards their retirement savings. If you’re running a business, you must understand these changes and ensure you comply with the new regulations.
Understanding the superannuation guarantee.
Superannuation guarantee, or SG as it’s commonly referred to, is a compulsory contribution you make towards your employees’ retirement savings. This contribution goes into a designated superannuation fund chosen by the employee. If they don’t choose one, you’ll need to select a default fund on their behalf.
The gradual rise: reaching 12% by July 2025.
The SG contribution rate is gradually increasing. It started at 10% in July 2021 and is on track to reach 12% by July 1st, 2025. This means for the upcoming financial year (2024-2025), you’ll need to contribute 11% of your employees’ ordinary time earnings (OTE) towards their superannuation.
Impact on your business and ensuring compliance.
The rising SG rate translates to a higher cost for your business. Here’s how to prepare for compliance:
- Payroll system update: Ensure your payroll system is programmed to calculate and deduct the correct SG contribution (now 11%) for the upcoming financial year. Up-to-date payroll software is crucial for accurate deductions and timely payments.
- Cashflow and budget review: The increased SG contribution can impact your cash flow. Revisit your budget and adjust it to accommodate the higher cost. This may involve reviewing expenses or exploring revenue-generating opportunities.
Staying on top of super payments.
The SG contribution deadline for each quarter typically falls on the 28th of the following month. Here’s how to ensure timely payments:
- Schedule super payments: Schedule your SG contributions in your payroll system to ensure timely payments to the nominated super funds. Consistent and on-time payments avoid penalties and ensure compliance.
- Record keeping: Maintain accurate records of your SG contributions for each employee. This includes the amount contributed, the date of payment, and the super fund details. These records are crucial for audits and providing employees with information upon request.
Working with your bookkeeper.
As experienced and professional bookkeepers, Being Accountable can be a valuable resource during this transition. Partnering with us means we can provide you with:
- Payroll system updates: We can help ensure your payroll system is programmed correctly to reflect the new SG rate and accurately calculate deductions.
- Cashflow management: We can work with you to review your budget and develop strategies to manage the increased SG costs.
- Record keeping and reporting: We can maintain accurate records of your SG contributions and prepare reports as needed.
Moving forward.
The July Super changes require some adjustments for your business. By understanding the implications and working with Being Accountable to ensure compliance, you can navigate these changes smoothly. Remember, clear communication with your employees and meticulous record-keeping are key throughout this process.
To find out more about super contributions, give Jo a call on 08 8294 4222 or email jo@beingaccountable.com.au
