The intricacies of superannuation compliance are constantly changing and 2023 will be no different. Let’s review and look ahead at some potential superannuation changes that will impact your business.
Superannuation guarantee increase
It has been more than six months since the minimum superannuation payment for employees increased from 10% to 10.5%. This change occurred as of 1 July 2022.
Come 1 July 2023 the contribution for eligible workers will increase from 10.5% to 11%.
The ATO has been working with digital service providers (DSPs) to ensure the guarantee increase is a smooth one.
You can check these details in your payroll software settings or contact your bookkeeper or accountant.
Why the rise?
Increases in superannuation payments have been around as long as super.
In the mid-1990s there were concerns that super contribution rates were likely to leave employees without sufficient superannuation for a comfortable income after retirement.
From the government’s perspective this means an increasing number of retirees reliant on the aged pension.
This concern led to a Parliament legislated gradual increase to 12% by 2025. It is hoped this increase will meet the basic needs of future retirees.
Thanks to compound interest, the 1.5% increase in required super contributions will make a significant difference to future super balances.
Removal of the superannuation eligibility threshold
Another change that took place on 1 July 2022 was the removal of the $450 per month eligibility threshold for when super is paid. This means casual staff or staff working shorter shifts are now entitled to super contributions.
For business this means paying super to some employees for the first time.
In this case employers provided these employees with a Standard Choice Form or requested stapled super fund details from the ATO – for more information about stapled superannuation click here.
Compliance is key with superannuation changes
The gradual increase of superannuation payments was introduced so business could plan and budget for the impact to cashflow.
For some businesses, the removal of the super threshold created challenges following the global pandemics, rising interest rates and inflation and supply chain demands.
Despite these challenges, businesses need to maintain compliance with superannuation contribution payments. Failure to make these payments can be costly.
If you or your business are struggling, it’s important to work with your accountant. Your accountant is an invaluable tool and resource for your business.
If you have questions or need accurate advice about superannuation changes in relation to your business and employees contact CVW Accounting on 9219 1300.
Or visit the ATO website for more information about superannuation changes.