Employers will need to make superannuation guarantee payments for more employees from next year, with the federal government moving to remove the $450 monthly minimum income threshold.
Currently, employers do not need to pay superannuation for employees who earn less than $450 per month.
The government plans to remove this threshold entirely, in an bid to improve equality in the superannuation system, as the majority of workers who earn less than this monthly amount are women.
According to the government’s Retirement Income Review, around 300,000 employees would benefit from removing this monthly threshold, with 63% of those employees women.
The government plans to introduce legislation to make this change by July 1, 2022, and it would come into effect at the start of the first financial year after the legislation is passed by Parliament.
Leading up to the budget, small business groups were expecting the monthly superannuation guarantee threshold to be removed, a change they said would affect a relatively small number of employers.
The superannuation guarantee is currently set at 9.5%, but is due to increase to 12% by 2025-26. There had been speculation the government would set to change the scheduled increase but it became clear prior to the budget that it would not go down that path.
The removal of the threshold is one of a number of budget policies directly aimed at supporting those on low incomes.
As foreshadowed in the weeks leading up the budget, the government has decided to continue the low and middle income tax offset for another 12 months.
The offset reduces personal income tax by up to $1,080, and is applied on a sliding scale depending on income level.
The policy is expected to benefit some 10 million Australians, and will cost the budget bottom line $7.8 billion over the forward estimates.