Important changes to Super Guarantee for employees under 18

From 1 July 2022, the $450 per month threshold for super guarantee is being removed and employers will be required to make super guarantee contributions to their eligible employee's super fund regardless of how much the employee is paid.

For those under 18 years old, Super payments will be calculated when working more than 30 hours in a week.

Reference
Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Act 2021.

 

By default, a new Super Guarantee Act (SA) Super Item has a blank Monthly Minimum Threshold. This will immediately calculate super contributions payment for SGA for all employees when earnings are greater than zero.

For the Reckon Accounts 2022 R2, the Monthly Minimum Threshold amount for each SGA Super item will be removed during the upgrade process.


To remove the Monthly Minimum Threshold manually for existing SGA Super Item:

  1. Go to List > Payroll Item List
  2. Edit the Super Payroll Item
  3. Click Next until the Monthly Minimum Threshold (page 9)
  4. Clear the amount or enter $0.00
  5. Click Next and Finish to save the changes


For employees under 18 years old, Super payments are:

  • Required when working more than 30 hours in a week
  • Not required when working 30 hours or less in a week


Approaches

Reckon Accounts offers a variety of suggestions for handling the changes in Super for Employees under 18 years of age. We recommend that users choose the overall best option that works for them.

SUMMARY
  1. Create a list of those under 18 years old
  2. Create a Payroll Schedule for this age group
  3. Create 2 Wages payroll Items:
    1. "Junior Pay <=30hrs pw" with Super inclusion turned OFF
    2. "Junior Pay >30hrs pw" with Super inclusion turned ON
  4. Adjust the payroll item used in pay run whenever relevant
    1. In most cases "Junior Pay <=30hrs pw" will be the default
    2. This is occasionally changed to "Junior Pay >30hrs pw"

Check out the detailed outline of this process below.


DETAILED
  1. Use the Employee Contact List to identify the age group

To help identify the age group for employees, we suggest creating a Payroll Schedule for employees under 18 years old.

Note that ATO calculates age in reference to a given date. Given that the tax year runs from 1 July to 30 June, we often need to calculate the taxpayer's age as at 30 June.

As an example, for Financial Year 2022/23:

  • Create an Employee Contact List report with the Date of Birth (DOB) column:
    • DOB on 01/07/2004 and above = 18 years of age and above
    • DOB on 30/06/2004 and below = Under 18 years old

  1. Use Payroll Schedule to categorize the age group
  • Go to Edit > Add or Edit Payroll Schedules
  • Create a new Payroll Schedule

  • Assign the new Payroll Schedule to the employees under 18 years of age using the Employee Contact List report
  • In the Employee record, change tabs to Payroll and Compensation Info
  • Then select the Payroll Schedule

  1. Create new Wages payroll items
  • Create a new Hourly payroll item
  • Name the item accordingly i.e. "Junior Pay <=30hrs pw"
  • At the end of the setup remove all Super inclusion

  • Repeat the steps and name the item accordingly i.e. "Junior Pay >30hrs pw"
  • At the end of the setup, leave all applicable Super inclusion

  • Apply the new Payroll item to the employee record

  1. Adjust the payroll item used in a pay run whenever relevant
  • When processing the pay, use the "Junior Pay <=30hrs pw" whenever the Employee has worked for a total of 30 hours or less per week. This setup will not attract Superannuation calculation.

  • Use the "Junior Pay >30hrs pw" whenever the Employee has worked for a total of more than 30 hours per week. This setup will calculate the Superannuation amount.


Other approaches

Option 1: Adjust SGA manually

Users can also choose to not make any changes and the Payroll officer can choose to manually adjust the SGA amount during the processing of pays instead.

  • Go to Review or Change Payments for the employee
  • Under Company Summary, set the Amount to $0.00

Option 2: Use a new SGA Payroll Item without Wages inclusion
  • Create a new SGA Payroll Item
  • On the Default rate and limit, remove the 10.5% rate
  • At the end of the setup, remove all Wages inclusion

  • Apply the new Payroll Item to the Employee record
  • During the processing of pays, use the new Super Payroll Item whenever the Employee has worked for a total of 30 hours or less per week
  • For more than 30 hours per week, use the regular Super Payroll Item to calculate Super



Need more help?

Ask the Reckon Community at: https://community.reckon.com/categories/reckonaccounts

Or Log a Support Ticket: https://www.reckon.com/au/support/

How did we do?

NSW State Payroll Tax Rate update for 2022

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