The Superannuation Guarantee (SG) has increased from 9.5% to 10% on 1 July 2021. The rate will continue to increase annually by 0.5% until it reaches 12% on 1 July 2025.

Given this change, be mindful of the following:

  • When processing your payroll, make sure to apply the 10% to Ordinary Times Earnings (OTE) amounts paid starting from 1 July 2021 and onwards.
  • The 9.5% rate still applies to OTE paid on or before 30 June 2021.
  • Update the payroll and accounting systems to reflect the increase in the super rate.
  • You cannot use your employee’s salary sacrifice contributions for an extra 0.5% of SG.
  • Determine if the additional SG contribution will be added to an existing salary package (no change in the employee’s take-home pay) or will be consolidated into an existing salary package (there will be a reduction in the employee’s take-home pay).

Ordinary Time Earnings refer to the income earned by your employees. It includes basic salary or hours worked, bonuses, leaves, loadings, and allowances. It does not cover overtime or reimbursements.

Maximum super contribution base and concessional contributions

Simultaneous with the SG increase, the maximum super contribution base will go up to $58,920 per quarter ($235,680 per year) starting on 1 July 2021, which equals a maximum SG contribution by your employer of $5,892 per quarter. 

The combined total of your employer and salary sacrificed contributions must not be more than $27,500 per financial year.

What happens if you don’t comply?

You may incur financial penalties if you fail to pay the:

  • new minimum super guarantee contributions of your eligible employees,
  • super contributions on or before the cut-off date, or
  • your employees’ chosen super fund. 

Click here for more information and updates about key super rates and thresholds.

Single Touch Payroll (STP) 2021 Update

Businesses that were previously allowed concessional reporting will need to report every payday using STP-enabled payroll or accounting software by 1 July 2021 to avoid incurring any unwanted penalties.

The STP Phase 2 which will require employers to report additional information through STP will start on 1 January 2022. Among the key features of this expanded version are:

  • Reducing duplication of information provided to the Government
  • Removing the need to send TFN and withholding declaration information to the ATO
  • Better defining the gross income components to make it easy for employees to understand their obligations and for employees to discern their earnings
  • Reporting employee payments according to income type or income stream/s

There are no required actions to take right now for STP Phase 2, but you can keep tabs on its latest update by regularly checking out updates on this ATO link.

Let Us Help

If your business has a turnover of over $1 million, ABJ Solutions is offering a complimentary one-hour meeting to help answer questions and model critical decisions with you. Get in touch with us today so that we can help guide you through these challenging times.


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