Preparing Your Business for the 12% Superannuation Guarantee Increase
Preparing Your Business for the 12% Superannuation Guarantee Increase
The Australian Government has legislated an increase to the Superannuation Guarantee (SG), gradually raising the compulsory rate to 12% by 2025. This change will impact businesses across the nation, especially those managing tight budgets or navigating payroll complexities. Here’s how your business can prepare effectively to minimize disruptions and ensure compliance.
1. Understand the Timeline
The SG rate is scheduled to increase incrementally until it reaches 12%. Here’s the timeline to keep in mind:
– Currently: 11% (as of July 2023)
– From July 1, 2024: 11.5%
– From July 1, 2025: 12%
Understanding these dates allows businesses to plan and phase adjustments, avoiding a sudden financial strain.
2. Assess Your Current Payroll Costs
Evaluate how the SG increase will impact your payroll expenses. Use this simple calculation:
Total SG Increase Impact = (Employee Salary) × (New SG Rate – Current SG Rate)
For example, if an employee earns $80,000 annually, the shift from 11% to 12% will increase their superannuation contributions by $800.
Multiply this across your entire workforce to understand the total cost increase
3. Update Your Budget
Incorporate the higher superannuation rates into your financial forecasts. Review:
– Operating Budgets: Adjust for increased payroll expenses.
– Cash Flow Projections: Ensure you’ll have adequate funds to meet obligations.
– Profit Margins: Determine if pricing adjustments or cost savings are needed to absorb the increase.
4. Review Employment Contracts
Some employment agreements stipulate that total remuneration includes superannuation. This means the increased SG could reduce an employee’s take-home pay. Ensure:
– Employment contracts are reviewed to clarify superannuation arrangements.
– Employees are informed about any changes to their pay or super contributions
5. Automate Payroll Adjustments
Modern payroll software makes it easier to stay compliant with SG changes. If you’re not already using one, now is the time to upgrade. Look for solutions that:
– Automatically update rates based on legislation.
– Provide real-time reporting on super contributions.
– Integrate with your accounting system for seamless processing.
6. Communicate With Your Team
Changes to superannuation can cause uncertainty among employees. Transparent communication is key:
– Explain why the increase is happening and when it will take effect.
– Reassure them of your commitment to compliance.
– Offer resources or education about the benefits of superannuation to their retirement savings
7. Engage With Payroll Experts
Navigating legislative changes, like the SG increase, can be challenging for small businesses. Engaging a payroll outsourcing service, like BAS and Balances, can save time, reduce errors, and ensure compliance. Our team ensures wages and superannuation obligations are met accurately and on time.
8. Stay Informed About Legislative Changes
Superannuation laws evolve frequently. Upcoming reforms like PayDay Super 2026 will add further reporting requirements. Staying proactive and informed will position your business for long-term success
Get Ready Today
Preparing for the 12% SG increase doesn’t have to be overwhelming. With proper planning, efficient systems, and expert support, your business can meet its obligations while maintaining a healthy bottom line.
Contact BAS and Balances to learn how we can help streamline your payroll processes, manage super compliance, and prepare for legislative changes with ease.
