The new superannuation laws came into effect on July 1, 2022. They saw the removal of the $450 threshold for super contributions. That means employers will have to pay superannuation from “dollar one” of an eligible employee’s wages.
Superannuation is the retirement savings that build up for your employee. As a small business owner, you need to know precisely how much your employees earn so that you can contribute the right amount to their super.
Without proper due diligence, you can be penalised. Let’s look at ways the new superannuation laws are impacting your business.
Increased Tracking
Before July 1, 2022, if an employee earned less than $450 per month, their employer didn’t have to contribute to superannuation. Now, everyone over 18 is eligible for super no matter how much they earn.
Small business owners now need to keep track of every eligible employee’s earnings and ensure that superannuation contributions are made from the first dollar earned. This will help them stay on track and avoid any compliance issues.
Higher Costs
Employers will have to pay super contributions for all eligible employees, including those who previously did not receive contributions due to the $450 threshold. This may increase business costs, especially for those with a large number of low-income employees.
And if a business fails to pay the correct amount of super contributions to eligible employees, it can face penalties and fines from the ATO. These penalties can add up quickly, resulting in high costs for the business.
Choice of Funds
Small business owners will also need to comply with the new SG rate, which is 10.5%. They’ll also have to comply with other super laws like offering a choice of a super fund to employees and transferring salaries on time.
Plus, business owners will have to set aside additional resources to make this happen. Failure to comply with the new rules can lead to penalties.
Employee Remuneration Packages
Small businesses heavily rely on skilled people to drive their success and growth. Without skilled employees, they may struggle to compete with larger corporations, leading to dissatisfaction and a higher turnover rate.
Plus, employers who choose not to offer benefits or reduce salaries may see their skilled employees leave for better opportunities elsewhere. This could result in increased recruitment and training costs, as well as a potential loss of productivity and knowledge.
The Takeaway
Small businesses will have to explore new avenues to help keep their employees happy without putting too much financial burden on their business. They’ll have to increase revenue through cost-saving measures to manage the impact of the new super laws.
That means exploring new markets, finding efficient production methods, and renegotiating with vendors and suppliers. Careful evaluation of these techniques can reduce the impact of the new superannuation laws and ensure your business runs smoothly.
Contact Accounting Tax Solutions today on 07 5559 1200, our team of highly skilled accountants will help you with your small business needs.