The May Federal Budget confirmed that the superannuation guarantee (SG) rate would as already legislated, increase from 9.5% to 10% from 1 July 2021.


Super is money you pay for your workers to provide for their retirement.  The minimum you must pay is called the super guarantee (SG):

  • the SG is currently 9.5% of an employee’s ordinary time earnings, but increasing over the coming years to 12% (see below)
  • you must pay the SG at least four times a year, by the quarterly due dates (by the 28th day of the month following end of quarter)
  • you must pay and report super electronically in a standard format, ensuring you meet Super Stream requirements
  • your super payments must go to a complying super fund – most employees can choose their own fund.

If you don’t pay an employee’s super on time and to the right fund, you must pay the superannuation guarantee charge (SGC) and lodge an SGC statement to us. The SGC is not tax-deductible.


The minimum SG rate is currently legislated to gradually rise from 9.5 per cent to 12 per cent over the next five years as set out in the table below.

The policy of the legislation is for the employer to contribute the extra half a per cent without impacting take-home wages, but this may not happen in all cases.

Employers will need to consider their profit margins, award/industrial agreements and that that this is not a one-off increase.  Employers will need to communicate their approach clearly, especially how it will impact employee payslips.

The current legislated increases are:

 Year Charge percentage
 Year starting 1 July 2020  9.5%
 Year starting 1 July 2021  10%
 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%

Employees paid via a superannuation-inclusive package.

If your employee arrangement or contract is a superannuation-inclusive package/agreement – then the SG increase would effectively be paid by your employee – and their take-home cash payments will likely reduce from 1 July 2021.

Talk to your impacted employees as early as possible to avoid any queries or complaints arising.

Or if the employer will keep take home cash payments the same, effectively giving staff a pay rise equivalent to the SG increase – this will need to be budgeted for and communicated.

Employees paid SG contributions on top of their cash income.

Similarly, if your employee arrangements/contracts are for wage + SG, then your wages bill will increase, and you will need to budget for this. Importantly – every time your employee gets a wage increase, you will have to allow for a dual increase to both superannuation and cash income. 

Employees under contract, industrial instrument and/or policy

For employers with different SG obligations e.g., from an award, the interaction of those obligations with the changing SG rate will need to be reviewed.

Payroll system capabilities

Understand how your payroll system will process this change BEFORE 1 July 2021, so you can test and comply by the due date. If you are using Xero accounting software then Xero automatically applies the correct rates for superannuation. Like tax tables, they store superannuation guarantee (SG) rates and retrieve the right percentage based on the payment date of your pay runs.

If you have any queries on how this impacts your business reach out to your trusted advisor.

Written by Marlaina Young of Fuel Consulting – Facebook.com/fuelbusinessconsulting



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