Superannuation changes you need to know about
The Federal Government recently announced an increase to the super guarantee for employers and raised the minimum wage threshold on super. Here’s what it means for small businesses.
By Paul Rattray
Increased super guarantee
In its recent budget announcement, the Morrison Government raised the super guarantee from 9.5 to 10 per cent.
While the idea has been floating around for a while many of us hoped that small business would get a little more breathing space coming out of the pandemic-related recession before being hit with the extra cost.
Of course, the idea is in part, about getting super balances back up after allowing people in financial duress during covid-19 to withdraw up to $20,000 over a two year period. This was a good idea for those who needed it during the pandemic, and about 3-4 million Aussies did.
But it’s payback time.
And while there is no question that super balances need to be boosted, and we can’t ignore the surveys which continually point out that most people won’t have enough super to rely on in retirement, we also have to move Australians away from the idea that superannuation will solely fund their retirement.
Aussies need more than super - they need financial advice
The fact is, in most cases, it won’t. Everyone will be much better off in retirement if they get professional financial advice earlier in their lives and put in place other investment strategies which will not only support a lifestyle as life goes through its various changes, but which will also support retirement.
This requires education to help all working Australians understand that planning for retirement should occur over a lifetime of working, not just in the last decade or two when the pressure is on.
Part-time workers now eligible for super
The other superannuation burden coming for small business is that the government has scrapped the $450 a month minimum wage threshold on super following industry calls to help low-income earners.
This will certainly benefit around 300,000 mostly part-time workers – the majority (about 60 percent) of whom are female and are disadvantaged by the current system, retiring with much less than men, particularly if they stop work to raise children for an extended period of time and return to the workforce part-time.
But for businesses such as those in the hospitality, retail and tourism sectors, which were hardest hit by covid, and which employ a significant number of part-time workers, this added cost is likely to take some time to prepare for. And there isn’t much… The new changes take effect at the start of the new financial year – July 1, 2021.
“It is what it is” as the trite saying goes, and these are sound measures. It is unfortunate though, that they put an increased financial burden on SMEs – which make up the majority of Australian businesses – at a time when many have already borne extra health and safety costs, and general business costs (such as moving services and communications online, allowing teams more flexibility to work from home etc) in response to covid.
Let’s not forget there is still some economic uncertainty ahead, too.
Prepare now for these superannuation changes
Many would agree that the Australian economy is fairing well, all things considered, but we are also tied to the global economy, which remains very fragile, and we’re not running at full steam – immigration is low, there’s a critical shortage of skilled e-commerce and cyber security experts, as well as specialists in other industries. International tourism is not back online yet, and that’s a major contributor to the country’s income. For the next several months at least, caution must prevail.
If you need help to understand these new super payments, or to get your business finance ready for additional payments, then we are here to help.
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