New legislation is removing a general exclusion to superannuation guarantee liability for an employer. From 1 July 2022, employers will be required to make superannuation guarantee payments for employees who earn less than $450 in a calendar month. This rule originated as a 2021 Federal Budget announcement.
The exclusion currently exists in SGAA 1992 s 27, subsection 2.
With the repealing of this section, workers will accrue a superannuation guarantee shortfall liability for an employer regardless of their level of income.
The legislation specifically states that the repeal will come into effect from the beginning of the next income year following royal assent. As mentioned above, this is going to be for the quarter beginning on or after 1 July 2022.
Payroll providers
Most of your clients will be using a third-party provider to facilitate their organisation’s payroll requirements, which includes a superannuation guarantee.
In this instance, they will be reliant on that third party to ensure that the obligations relating to the superannuation guarantee are taken care of. The best practice to ensure a smooth transition to the new rule, should it get parliamentary approval, are the following options:
Ensure the provider provides a relevant update to the system which encapsulates the change.
Completing a “dry run” of payroll once the new law comes into effect, ensuring the changes are correctly accounted for.
Other exemptions not covered in the announcement
It is worth noting that the repeal of the law has no current effect to a second exclusion to superannuation guarantee relating to employees under the age of 18.
Under SGAA 1992 s 28, an exclusion to superannuation guarantee exists where:
an employee is under the age of 18 in the calendar month, and
they are a part-time employee.
A part-time employee is defined as a person who is employed to work not more than 30 hours per week. For the purposes of calculating a superannuation guarantee shortfall for a particular month, the 30 hours per week rule applies for each working week. This means that an employee may have a shortfall amount for only part of their monthly earnings.
