Wednesday, 14 May 2014 08:10

Budget 2014 - Super Guarantee rate to increase to 9.5% - changed schedule for increase

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Superannuation guarantee rate to increase to 9.5% - Change to schedule for increase to 12%

From 1 July 2014

 

 

The Government has announced that the superannuation guarantee (SG) rate will increase from 9.25% to 9.5% from 1 July 2014, as currently legislated, given the defeat of the Minerals Resource Rent Tax (MRRT) Repeal and Other Measures Bill 2013 in the Senate.

However, the Government proposes to amend the schedule for SG to increase to 12% by freezing the SG rate at 9.5% from 1 July 2014 until 30 June 2018, and subsequently increasing the SG rate every year by 0.5% until it reaches 12% from 1 July 2022.

The table below shows the scheduled increase as currently legislated, as proposed in the defeated MRRT Repeal and Other Measures Bill 2013, and under the new Government proposal.

Financial year

SG rate 2010/11 Federal Budget, legislated 29 March 2012

Proposed SG rate defeated MRRT Repeal and Other Measures Bill 2013

Proposed SG rate 2014/15 Federal Budget

2012/13

9%

9%

9%

2013/14

9.25%

9.25%

9.25%

2014/15

9.5%

9.25%

9.5%

2015/16

10%

9.25%

9.5%

2016/17

10.5%

9.5%

9.5%

2017/18

11%

10%

9.5%

2018/19

11.5%

10.5%

10%

2019/20

12%

11%

10.5%

2020/21

12%

11.5%

11%

2021/22

12%

12%

11.5%

2022/23

12%

12%

12%

GEM Capital Comment

This announcement gives employers and employees certainty that the SG rate will increase to 9.5% from 1 July 2014, allowing employers to prepare for the increase to their SG obligations, and giving time for employees’ salary sacrifice arrangements to be amended for the 2014/15 financial year to ensure they remain within their concessional contributions cap.

However, the new proposal represents a further delay to the SG rate reaching 12% by another year compared to the Government’s previous proposal, and represents a delay of 3 years compared to current legislation. Therefore, the new proposal will further reduce the SG entitlements of all employees until the SG rate reaches 12% from 1 July 2022 under the new proposal. 

Read 1395 times Last modified on Wednesday, 14 May 2014 13:41
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