Superannuation Guarantee to increase to 12%

The Federal Government has announced some major changes to super recently when the Superannuation Guarantee (Administration) Amendment Bill 2011 was introduced into Parliament.  One change of particular significance to small business will be the increase to the Superannuation Guarantee charge - with the current rate of 9% set to gradually increase to 12% by July 2019.

The following table indicates the schedule of increases each year, starting with a 0.25% p.a. increase for the first two years, and then 0.5% p.a.  increases thereafter until reaching the 12% level by 1 July 2019:

Other changes include raising the age limit from age 70 to age 75 so that compulsory contributions can be made for older employees.

The Government has made these changes to boost retirement income for Australian workers to a more "adequate" level.

Although the increments are small and gradual, some small businesses may struggle with cash flow and should consider preparing for the changes by factoring in the new rates with any current wage negotiations and by reviewing their cash flow procedures.  

For more information on the Superanuation changes, talk to your superannuation advisor or view the fact sheet "SUPERANNUATION — INCREASING THE SUPERANNUATION GUARANTEE RATE TO 12 PER CENT"

Stephanie Lee is a Senior Bookkeeper and co-founder of Imprest Business Services.  Imprest are specialists in providing tailored administrative solutions for small businesses