Instead of pausing the superannuation guarantee rate at 9.25%, as previously announced, the Government will now increase the SG rate to 9.5% on 1 July 2014 (as currently legislated) and leave it at this level until 30 June 2018. The SG charge percentage will then increase by 0.5% each year until it reaches 12% from 2022-23, a year later than previously proposed. As such, employers are required to increase their superannuation contributions on behalf of employees to 9.5% of ordinary time earnings from 1 July 2014 (as currently legislated).
The Treasurer said this change to the schedule for increasing the superannuation guarantee rate to 12% is necessary to give certainty to employers and employees. This is because the Senate has refused to pass the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013 which contained the measures to pause the SG rate at 9.25% for 2014-15 and 2015-16. That Bill will not proceed after it was negatived in the Senate on 25 March 2014. Even if the Bill was re-introduced, the amendments were unlikely to be passed by the Senate before 1 July 2014. The measure is estimated to provide a net gain to revenue of $90m over the forward estimates period.
Date of effect – The measure will apply from 1 July 2014.
[WTB 20, 13/5/14]