As you should be aware by now, the Superannuation Guarantee is increasing to 9.25% on July 1^st 2013. This is part of a long term shift to 12% which is detailed on our Superannuation page.

For many employers this will have little administrative impact. However, for employers who use contracts where there’s a total salary inclusive of Super, this change will require a thorough review of all employee contracts.    

Example 1

Base Salary                                                                                              $59,633

Superannuation Guarantee Contribution (currently 9%)                                  $5,367

Total Salary Package                                                                              $65,000

It’s our belief that this way of showing a salary could allow for the absorption of the SG increase within the ‘Total Salary Package’.

So, as of July 1 2013, this kind of salary could change to: $59,497 + $5,503 (9.25%) = $65,000.

Note: It’s important to review a contract in its whole form to form a definitive view in each case.

Example 2

Annual salary of $65,000 (inclusive of superannuation)

It’s our belief that, like Example 1, this way of showing a salary allows for the absorption of the SG increase within the ‘Total Salary Package’.

So, as of July 1 2013, this kind of salary could change to: $59,497 + $5,503 (9.25%) = $65,000.

IMPORTANT

If you were going to go down the path set out in Examples 1 & 2 you might face a difficult discussion with an employee. They might claim that their salary is being ‘decreased’. You would need to explain that there is not being a total salary decrease, rather that there is being a re-apportion. More Super, less wages, same total salary package.

Still, not an easy discussion to have. One way that might ease this discussion is if you have your contract review date on the 1^st of July each year. That way, any small decrease in wages might be offset by an annual salary increase. Remember, the SG percentage is changing every year on July 1^st until 2019!

Example 3

Base salary of $60,000 + superannuation

It’s our belief that, unlike Examples 1 & 2, this way of showing a salary does not allow for the absorption of the SG increase within the ‘Total Salary Package’.

So, as of July 1 2013, this kind of salary would change to: $60,000 + $5,550 (9.25%) = $65,550.

Please call your payroll contact to discuss how these changes affect your salaried staff members.