The Superannuation Guarantee Levy is represented as a percentage of an employees’ wage.
Therefore, the higher the wage, the greater the amount that the employer must contribute – in dollar terms (subject to the maximum contribution base).
The Government has announced that the compulsory Superannuation Guarantee Levy will increase from 9% p.a. to 12% p.a. between 1 July 2012 and 30 June 2026.
Why is the Superannuation Guarantee Levy Rate increasing?
The reason why the Government contributes so much towards funding the Age Pension is because too many Australians have not saved for their own retirement and rely on the Government to fully or partially substitute their income to cover living expenses throughout retirement.
Some of this can be attributed to the Government promising to fund the population’s retirement in exchange for increased taxes in the early 1990s.
By increasing the Superannuation Guarantee Levy rate, most employees will effectively have their take-home wage reduced and a higher amount contributed to their superannuation account. I say effectively because employers are now offering salary packages inclusive of super, so that they are not impacted by a gradual increase in the SG Levy.
Higher Superannuation Contributions into employees’ accounts will result in less strain on the Government upon retirement of the employees, as it is intended they will have approximately 75% of their pre-retirement income able to be funded using their superannuation savings, which they are unable to access until a certain age.
What is the Superannuation Guarantee Levy?
As mentioned, the Superannuation Guarantee Levy is increasing over time. Listed below is the superannuation guarantee rate history and proposed rates:
|Period||Superannuation Guarantee Rate (Percentage %)|
|1 July 2003 – 30 June 2013||9%|
|1 July 2013 – 30 June 2014||9.25%|
|1 July 2014 – 30 June 2015||9.5%|
|1 July 2015 – 30 June 2016||9.5%|
|1 July 2016 – 30 June 2017||9.5%|
|1 July 2017 – 30 June 2018||9.5%|
|1 July 2018 – 30 June 2019||9.5%|
|1 July 2019 – 30 June 2020||9.5%|
|1 July 2020 – 30 June 2021||9.5%|
|1 July 2021 – 30 June 2022||10%|
|1 July 2022 – 30 June 2023||10.5%|
|1 July 2023 – 30 June 2024||11%|
|1 July 2024 – 30 June 2025||11.5%|
|1 July 2025 – 30 June 2026||12%|
Compulsory Employer SGC payments are only required to be paid on an employees wage up to the quarterly maximum superannuation contribution base. To read more about the limits, levels and dates associated with the maximum superannuation contribution base, click here.
Click here for more information on the Division 293 tax for high income earners.
Superannuation Rate Calculator
The calculator below can be used to calculate the compulsory superannuation guarantee obligations required to be paid by an employer on an employee’s wage.