Understanding the Super Guarantee Rate Increase: What Employers Need to Know
The Australian Government has confirmed that the super guarantee rate increase to 12% will take effect on 1 July 2025. This is the final stage in a series of scheduled increases aimed at strengthening retirement savings for Australian employees.
Employers must apply the 12% super guarantee rate to all salary and wages paid on or after 1 July 2025, regardless of when the work was performed. So, even if the work occurred before July, the super guarantee rate increase applies to payments processed on or after the new financial year begins.
Key Dates and Employer Obligations
- Effective Date: 1 July 2025
- New SG Rate: 12% of ordinary time earnings (OTE)
- Quarterly SG Payment Due Dates: 28 October, 28 January, 28 April, and 28 July
Employers must ensure SG contributions are paid accurately and on time. Missed or underpaid contributions can lead to super guarantee charge (SGC) penalties, which include interest as well as admin fees and are not tax-deductible.
Impact on Payroll and Financial Planning
With the rate increasing, employers will need to make a few updates:
- Payroll Systems: Make sure your payroll software is updated to apply the 12% SG rate from 1 July.
- Budgeting: Review your payroll forecasts to factor in the increased superannuation expense.
- Staff Communication: Let employees know that their retirement savings will be boosted, this is a positive change that helps them in the long run.
Preparing for the Transition
To avoid last-minute issues, take the following steps:
- Review Employment Agreements: If you’re paying above the minimum SG rate, you may not need to make changes. But check your agreements to confirm.
- Coordinate with Your Payroll Provider: If you’re outsourcing payroll, ask them to confirm when the new SG rate will be applied.
- Educate Staff: A short communication piece or FAQ can help clarify what this change means for employees.
Resources to Assist Employers
The ATO provides a number of helpful tools and checklists to support small business employers in staying compliant with super changes. These include:
- Super Guarantee Contributions Calculator
- SG Payment Dates Calendar
- Simple Checks for Super Success Checklist
These can help reduce errors and ensure a smooth transition into the new SG rate.
Stay Ahead with Cotchy
The upcoming super guarantee rate increase to 12% is a critical milestone for businesses and employees alike. For employers, it’s an opportunity to review payroll operations, stay compliant, and reinforce trust with staff by supporting their long-term financial wellbeing.
If you need help navigating the super changes, get in touch with the team at Cotchy. We’re here to support you with compliance and solutions that keep your business running smoothly.
Source: ATO