Understanding the business impact of changes to superannuation

Here’s a snapshot of the proposed key changes. 

1. A single super account to follow people when they move from job to job (known as 'stapling')

'Stapling' is effective from 1 November 2021.

‘Stapling’ is where your new employees will automatically keep their existing super fund (if they have one) when they start their employment with you, unless they choose a fund themselves.

There are tie-breaker rules to determine which fund will be ‘stapled’ to an employee where they have multiple funds.

You will need to check with the Australian Taxation Office (ATO) if your employee has a stapled fund by logging onto ATO online services and entering the employee’s details.

You can read more about ‘stapling’ at our ‘A focus on stapling’ page. 

2. Super Guarantee (SG) contributions have increased from 9.5% to 10% 

Compulsory employer SG payments increased from 9.5% to 10% on 1 July 2021.

How this impacts your SG obligations

You’ll need to adjust your payroll systems to pay the increased amount to your eligible employees.

If you don’t pay the correct rate of SG into your employees’ super accounts by the quarterly due date, you may have to pay the Superannuation Guarantee Charge (SGC). This ATO penalty for late or inaccurate payment includes all the SG amounts owing to an employee, plus interest and an administration fee. You will also need to report and rectify any missed payments by lodging an SG Statement with the ATO. For more information about your SG obligations and quarterly due dates, visit the ATO website.

3. Contribution caps have increased

Contribution caps have increased for the first time since 2017. 

It’s also worth noting that anyone who triggered their bring-forward period in either the 2019/20 financial year or the 2020/21 financial year can’t take advantage of the higher non-concessional cap until their current bring-forward period expires. 

The transfer balance cap also increased with indexation, taking it to $1.7 million. This means an individual can’t make any non-concessional contributions if their total superannuation balance is $1.7 million or more at 30 June 2021. 

How to remain within contribution caps 

Employees are responsible for ensuring they don’t breach their overall contribution caps each year.

However, as an employer, the Federal Government also sets a maximum limit on an employee’s income on which you need to pay SG contributions – the maximum superannuation contribution base. The limit is indexed to AWOTE and changes every financial year. For 2021/22, the limit is $58,920 per quarter, so you only need to pay SG contributions on any amount an employee earns up to $58,920 per quarter for the 2021/22 financial year.

4. New electronic reporting payroll obligations

The Government introduced Single Touch Payroll (STP) in 2018 to reduce employers' reporting burdens. Using STP-enabled accounting or payroll software, like Xero or MYOB, employers can report all employee payroll information (salaries, PAYG withholding tax and super) directly to the ATO each time they are paid. 

Employers with more than 20 employees have been using STP since 1 July 2018, but from 1 July 2021, all employers have to report payroll obligations electronically (unless they have an exemption). 

In a broader enhancement to STP, Phase 2 is due to roll out on 1 January 2022. The ATO is working with software providers to update all existing STP-enabled software so employers benefit from further streamlined reporting. Rather than reporting information about employees to multiple government agencies, the software will enable consolidated reporting, easing the administration burden.

How this impacts your payroll software

We recommend you speak to your existing software provider and/or check the ATO website for more information about the changes closer to the implementation date.