$450 Super Threshold Scrapped - How This Will Impact Your Business
Author: Sarah Bowrey
The Federal government first announced as an election promise that it would scrap the $450 threshold in last year’s federal budget, however the bill to remove the monthly income threshold was only passed in Parliament last week.
What does this mean for you and your businesses?
Australian employers are not currently required to pay superannuation guarantee (SG) contributions to employees that earn below $450 per month however from 1 July 2022, employers must pay SG on all earnings for their employees, who are over the age of 18, no matter how little these employees receive each month. Also note from 1 July 2022, SG will be payable to employees under 18 if they work more than 30 hours per week regardless of how much they earn.
The Government estimates that this will affect approximately 300,000 people so employers with staff currently earning below $450 each month will need to start preparing now to ensure that:
- they budget for any additional SG payments. SG is currently set at 10% of an employee’s ordinary time earnings and is required to be paid by the 28th day after each quarter; and
- they collect the correct information from their employees in advance to ensure that SG payments are made to the correct fund and don’t bounce back.
Other significant changes passed include:
- Increasing the amount eligible for release under the First Home Super Save Scheme from $30,000 to $50,000
- Reducing the downsizer contribution eligibility age from 65 to 60
- Removing the work test and extending the non-concessional contribution bring- forward rules for members aged between 67 and 75
- Allowing trustees of funds with no disregarded small fund assets to choose their preferred method of calculating exempt current pension income (ECPI) when they have member interests in both accumulation and retirement phases for part, but not all, of the income year
With the exception of the changes to ECPI, which commence from 1 July 2021, all of the above measures come into effect from 1 July 2022.
Contact our specialist team at on 4721 8500 for more information.