From 1 July 2025, the Superannuation Guarantee (SG) rate will officially increase from 11.5% to 12%. This change marks the final step in a long-term plan to boost retirement savings for Australian workers—but for small business owners, it also means preparing for increased wage costs and updated payroll systems.
In this article, we’ll explain what the increase means for your business, how to prepare, and why staying compliant will save you time, money, and stress.
1. What Is the Superannuation Guarantee?
The Superannuation Guarantee is the minimum percentage of an employee’s ordinary time earnings that employers must contribute to their super fund.
In 2025:
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Current rate: 11.5% (as of 1 July 2024)
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New rate from 1 July 2025: 12%
💡 This applies to all eligible employees, whether full-time, part-time, or casual.
2. Why Is the Rate Increasing?
The SG rate has been gradually increasing since 2021, aiming to improve retirement outcomes for Australians. The move to 12% is part of a legislated pathway outlined in the Superannuation Guarantee (Administration) Act 1992, and it will not change unless future legislation is introduced.
3. What Does This Mean for Your Business?
✅ Higher Wage Costs
An increase from 11.5% to 12% might seem small—but over time, it adds up.
For example:
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An employee earning $70,000 per year currently receives $8,050 in super.
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At 12%, they’ll receive $8,400—an extra $350 per year.
Multiply that across multiple staff and you’re looking at a noticeable shift in annual payroll expenses.
4. Who Needs to Comply?
All Australian employers must comply with SG rules if:
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You pay your employees more than $450/month (or if they’re under 18 and work more than 30 hours/week)
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Your workers are classified as employees or contractors treated as employees for super purposes
💡 Contractors paid mainly for their labour may still be entitled to super—even if they have an ABN.
5. How to Prepare for the 12% Increase
To avoid errors or penalties, here are key steps to get ready before 1 July 2025:
🔹 Review Your Payroll System
Ensure your accounting software—like Xero, MYOB or QuickBooks—is configured to apply the new SG rate from the first pay run in July.
🔹 Update Employment Contracts
Review employment contracts or salary packages. If super is paid on top of salary, your business will wear the increase. If super is included in the total package, take care to communicate changes clearly.
🔹 Forecast Cash Flow Impacts
Factor in higher super costs in your cash flow forecasts and budgeting for the 2025–26 financial year.
💡 A local Penrith accountant can help assess how the increase affects your payroll obligations and tax deductions.
6. What Happens If You Don’t Pay on Time?
Missing your SG obligations leads to the Superannuation Guarantee Charge (SGC), which includes:
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The unpaid super amount
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Interest (currently 10%)
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An administrative fee
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No tax deduction for late payments
SG payments are due quarterly, but many employers now pay monthly or with each pay run to avoid last-minute errors.
7. Additional Tips to Stay Compliant
✔ Automate your super payments through your payroll software or super clearing house.
✔ Double-check new hires are added correctly into your system.
✔ Keep records for five years, including pay slips, super payment confirmations, and employee details.
✔ Communicate changes to your staff so they’re aware of how this affects their retirement savings.
8. What About Contractors and Casual Workers?
Many small businesses incorrectly assume that casuals or contractors don’t require super.
If you’re paying someone:
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Mainly for their personal labour
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On a regular or ongoing basis
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Without delegating work to others
…you may still be required to pay SG contributions. Get advice early if you’re unsure.
Conclusion
The jump to 12% super from July 2025 is an important milestone for employees—and a significant compliance task for small business owners. With proper planning, software updates, and professional advice, you can stay on top of the change and continue operating smoothly.
Need support reviewing your payroll system or budgeting for the increase? Carmody Accounting, your trusted Penrith accountant, is here to help you stay compliant and focused on growing your business.
