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Remove $450 eligibility threshold for superannuation on Payroll classic FAQ

Jude Healey
Updated

Available for the following plans: Employment Lite, Employment Plus, Employment Unlimited
Available for the following Payroll plans: Standard, Premium

Question

Currently, if an employee earns $450 or more in a month, you then must also pay a superannuation guarantee. From the 1st of July 2022, you will need to pay superannuation guarantee contributions to an employee's super fund regardless of how much you pay them. This change comes about because of the presiding Government at the time (May 2021) announced they would remove the current $450 minimum monthly salary and wage threshold to pay superannuation guarantee.

The Treasury Laws Amendment made this change Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Act 2021 with royal assent received on 22 February 2022. As a result, from the 1st of July 2022, employers will be required to make superannuation guarantee contributions to their eligible employees regardless of the pay the employee receives each month.

Warning

All other existing exclusions to be considered when paying the superannuation guarantee will still apply, e.g. under 18s must still work for over 30 hours per week to be eligible.

Answer

This article will discuss the changes being made to the platform to reflect the SG eligibility change and how this change will affect existing employees and their current superannuation threshold setting. We broke the article down into the following sections:

  What is the Employee superannuation threshold setting prior to 01 July 2022?  

Locating an employee's superannuation eligibility threshold

You can locate an employee's superannuation threshold via the Pay Run Defaults page. You can access this page within the Employee module of the Payroll classic platform. Within every employee file, there is a Super Threshold setting that you can view. By default, it sets the platform sets the superannuation threshold amount for every employee at $450. You can override the default value by clicking on the Override checkbox and entering a different value.

Important

The default value and override functionality are identical whether you create or update an employee via the UI, API, or by importing the employee data.

Interaction with pay rate templates and superannuation threshold setting

When attaching an employee to a pay rate template, the superannuation threshold amount attached to the pay rate template itself governs the employee. You cannot override this at the employee level. The superannuation threshold amount is editable only from the pay rate template itself. When you change the pay rate template in this scenario, this will then flow through to all employees attached to that template. To read further information on pay rate templates refer to the following article. 

  How will the employee's superannuation threshold setting be configured on the platform from the 1st of July 2022?  

The main difference from the 1st of July 2022 is that, by default, there will be no superannuation threshold, i.e. $0  applied when adding a new employee. The Default Superannuation Threshold setting will still be viewable in the employee's Pay Run Defaults page.

When you do not select the Apply a Threshold Amount checkbox, this conveys that the employee does not have a superannuation threshold amount. You then will pay them Superannuation Guarantee (SG) contributions on all on-target earnings (OTE) regardless of the employee's total monthly earnings amount.For example:

  • If you pay an employee $400 gross in May 2022, there is no superannuation payable on this amount. This is because the employee did not make enough to reach the minimum $450 threshold.
  • From July 2022 and onwards, if the employee earns $400 gross (OTE) in the month, then they will receive superannuation on that total amount because there is now no minimum monthly eligibility threshold.

If the employee still needs a threshold applied, tick the Apply a threshold amount checkbox and then enter what the required threshold amount. Using the override functionality should only be for employees, where no superannuation is to be calculated on their earnings at all. For example:

  • High income earners who have opted out of superannuation or
  • Self-employed who choose not to be paid super, and who share pay categories with employees that are eligible for superannuation.

If these employees do not share pay categories with eligible employees and the pay category Super Rate field has a value of 0 then there will be no need to set a superannuation threshold amount in the employee's Pay Run Defaults screen.

Important

The default value and override functionality will be identical whether you create or update an employee via the UI, API, or by importing the employee data.

What threshold setting should I apply for employees under the age of 18?

Although the $450 monthly we have removed the eligibility threshold for employees under the age of 18, the eligibility criteria of working over 30 hours a week remain. The platform will continue to check the weekly hours, when processed in the pay run, to determine whether you owe superannuation contributions.

Interaction with pay rate templates and superannuation threshold setting

As stated in the above section, employees attached to a pay rate template cannot override the superannuation threshold amount at an employee level. Rather, this will need to be edited from the pay rate template itself. 

  Will existing employee settings change from 1 July 2022?  

Only employees that meet a defined set of criteria will have their superannuation setting automatically updated by the system, so no SG threshold is being applied for any pay runs with a date paid of the 1 July 2022 and onwards. The following scenarios will clarify whether the system will automatically update employee settings:

For clarity, and to avoid repetition, when making reference below to SG we will calculate it on all employee earnings, regardless of the amount this only pertains to earnings (pay categories) where an SG rate is payable and also considers that an employee under the age of 18 must work over 30 hours a week to qualify for SG.

Scenario A: The existing Super Threshold field in the employee's Pay Run Defaults page an it displays a value of $450?

In this scenario, the system will automatically update the employee's superannuation setting to have no superannuation threshold from the 1st of July. This means that for all pay runs with a date paid of the 1st of July 2022 and onwards, you will calculate SG on all employee earnings, regardless of the amount. 

Scenario B: Did you attach the employee to a pay rate template assigned to the pre-packaged Hospitality Industry (General) Award 2010 or Restaurant Industry Award 2020?

The Hospitality Award and the Restaurant Award both provide a lower threshold for salary or wages to be considered for SG, being $350 per month. You can decide on the 1st of June 2022 to remove the clause in both awards that refer to this lower threshold. This means that employees covered by these awards will also have no monthly eligibility threshold effective from 1 July 2022.

If your business installed either the Restaurant Award or Hospitality Award, and you attached this to an employee within your business or included it in a pay rate template in a pre-packaged award, then the system will not automatically update the employee's superannuation settings.

Rather, we will make made an award update you can install. This update will include the removal of the SG monthly threshold amount. You should only update the award once you finalise your pay runs for the 21/22 FY. We will include in this package updates to the employee's superannuation setting so that they have no superannuation threshold applied for any pay runs with a date paid of the 1st of July 2022 and onwards.

If your business creates and assigned their own pay rate templates) to employees, the superannuation threshold setting will need to be managed by your business. Installing an award update will only update settings for pay rate templates that are linked to the pre-packaged award.

To know whether your business has its own pay rate templates, select the Your Pay Rates Template option on the Pay Template page. To read further information on this feature, refer to the following article. If you have employees linked to the templates, we will show this on your screen as well.  

Scenario C: Did you override the existing Super Threshold field on the employee's Pay Run Defaults page and it now displays a value of $0?

In this scenario, the system will basically keep the employee's superannuation setting of having no superannuation threshold, but the setting display will update from the 1st of July This means that for all pay runs with a date paid of the 1st of July 2022 and onwards, there will continue to be no threshold and the calculation of SG occurs on all employee earnings, regardless of the amount. 

Scenario D: Did you not override the existing super threshold field in the employee's Pay Run Defaults page and it displays a value other than $0?

In this scenario, the system will not automatically update the employee's superannuation setting but will rather keep the SG threshold amount that currently applies to the employee. The reason the system will not remove the SG threshold is because it would be unsafe to assume.

As an example, if the Override checkbox has a tick next to an employee's superannuation threshold setting and the value entered is $450, only the display layout will update on the 1st of July. Also, all pay runs with a date paid on the 1st of July 2022 and onwards will continue to apply the $450 minimum threshold when calculating SG on this employee's earnings. 

Another example would be where the Override' checkbox of an employee's superannuation threshold setting has a tick and the threshold value entered is $0.10. Only the display layout will update on the 1st of July. All pay runs with a date paid of the 1st of July 2022 and onwards will continue to apply the minimum threshold of $0.10 when calculating SG on this employee's earnings.

  How do I undertake an audit of employee super threshold settings?  

In order to ensure your employee's superannuation threshold settings will be correct from the 1st of July 2022, we strongly suggest you undertake an audit of your payroll data. The easiest way to do this would be to export the employee data. To do this, first download your Employee data, and then open the file and navigate to each SuperThresholdAmount column in the export. Filter the column to remove any blanks field or ones with $0 entered. The reason for this is that the system will automatically update the superannuation threshold settings for anyone with these values, as per Scenario A and Scenario C.

If any employees with a value of 350, check whether the employee falls under Scenario B. If you assign the employee to a pay rate template linked to either the Hospitality or Restaurant Award, then you just need to wait until the publishing of the applicable Award update. You can then install the update only once all 21/22 FY pay runs finalise and are closed off. 

If you assign the employee to a business-created pay rate template, then note these employees as they will need manually updating. We explain this in the section below. Finally, for any employees with any other value, double check their situation and what their threshold should be from the 1st of July 2022. Where they need change, refer to the options in the next section on how this can be done.  

  What is required for manually updating employee super threshold settings?  

This section is only relevant where an employee's superannuation threshold setting will need updating manually because the system will not make an update automatically. Before we run through the ways to update employee details, it is essential to complete the update only after the processing and finalising the last pay run for the 21/22 FY, and no further pay runs for that financial year are required for the affected employee(s).

The update is required before you create the first pay run with a date paid on or after the 1st of July 2022. There are multiple ways you can update an employee's superannuation setting, depending on your scenario/preference:

  1. You can individually update the value contained within an employee's Super Threshold field
    • Navigating to the affected employee's Pay Run Defaults screen.
    • Untick the Override / Apply a threshold amount checkbox
    • Click the Save button.
  2. You can choose to bulk update the Super Threshold field if there are several employees that need to be updated. To do this:
  3. I attached employees to a pay rate template that we linked to either the Hospitality or Restaurant Awards and it needs the $350 threshold removed:
    • Click on Apply the Update button once we publish the award update notification to your business dashboard. You can read more on updating awards in the following article.
  4. We attached employees to a pay rate template we created and the Super Threshold field in the pay rate template needs updating instead of within the employee file. To do this:
    • Export your pay rate template data.
    • Ensure that you select in the Pay Rate Templates drop-down the Your Pay Rate Templates option.
    • Navigate to the SuperThresholdAmount column in the export.
    • Delete the values in each cell so that the field is blank.
    • Import the updated version of the file. 

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