Superannuation Guarantee base rate to increase to 10% from 1 July 2021

As confirmed in this year's Federal Budget, a reminder that from 1 July 2021, the Superannuation Guarantee (SG) base rate is set to increase to 10 per cent, rising from 9.5 per cent.

As background, the Superannuation Guarantee is the amount that an employer must pay into a Superannuation account on behalf of each of their employees.

Where an employer fails to make payments or makes them for an amount less than required, this will incur a penalty with the Australian Tax Office, calculated at a higher amount than the underpayment of Superannuation.

Ahead of 1 July, please ensure you have the appropriate procedures in place to correctly pay staff the increased amount. Where you utilise an online payroll solution, an automatic update may be set for ahead of time to incorporate the change - however it is best to confirm with your software provider this is the case.

It is important to also note, in the Financial Years' that follow until 2025, the amount will increase by 0.5 per cent each year (as per below).

Year SG Base Rate Percentage (%)
Year starting 1 July 2022 10.5%
Year starting 1 July 2023 11%
Year starting 1 July 2024 11.5%
Year starting on or after 1 July 2025 12%


Impact on Businesses' Payroll Tax

For Payroll Tax purposes, Superannuation Guarantee is considered to form part of the employers "taxable wages" calculation. For businesses, the new SG base rate means an employer's Payroll Tax liability will also increase.

Currently, the Payroll Tax Rates are set at 4.75% for employers up to $6.5 million in taxable wages, and 4.95% for large businesses above the $6.5 million taxable wages threshold.


Increases to Superannuation Contribution Caps

Concessional and non-concessional Superannuation Contribution Caps are also set to increase from 1 July 2021. From this date, the annual concessional contribution cap will increase to $27,500 (from $25,000), whilst the non-concessional contribution cap will increase to $110,000 (rising from $100,000).

Alongside this, the Total Super Balance Cap will also rise to $1.7 million (previously set at $1.6 million).


Extension to Superannuation Minimum Drawdown

Announced by the Morrison Government earlier this week, the 50% temporary reduction in Superannuation Pension Minimums has been extended by a further 12 month period to 30 June 2022.


For More Information

Should you have any questions about the upcoming change in the SG base rate, please feel free to contact the Archer Gowland Redshaw office to speak with an adviser on (07) 3002 2699 | (07) 3221 4004.


Aisha Thomas

Written by Aisha Thomas

Aisha is a fully-qualified Business Services Manager, with over 12 years’ experience working within the Accounting industry. In her role with Archer Gowland Redshaw, Aisha specialises in providing tailored accounting, taxation, and strategic business advice to SMEs and high-net wealth individuals – helping clients to achieve their best financial and business outcomes.