Superannuation Guarantee Increases to 12% from 1 July 2025: What Small Business Owners Need to Know

As of 1 July 2025, the Superannuation Guarantee (SG) rate has increased to 12%, marking the final step in the government’s plan to enhance retirement savings for Australian workers.

The superannuation guarantee is set to reach 12% by 2025, as detailed by the source: ATO – Super guarantee rate.

This change impacts all employers, including small businesses and company directors, who must now contribute 12% of an employee’s ordinary time earnings (OTE) to their superannuation fund.
Source: ATO – How much super to pay

Key Changes Effective 1 July 2025

• SG Rate Increase: The SG rate has risen from 11.5% to 12%
• Application of New Rate: The 12% rate applies to all salary and wages paid to eligible workers on and after 1 July 2025, even if some or all of the pay period it relates to is before this date
• Final Scheduled Increase: This is the final scheduled increase under the current legislation
  Source: ATO – SG changes

What This Means for Your Business

Payroll Adjustments
Ensure your payroll systems are updated to reflect the new 12% SG rate. Most accounting software, like Xero, will handle this automatically, but it’s important to verify your settings.

Review Employment Contracts
Determine whether your employment agreements specify remuneration as inclusive or exclusive of superannuation:

• Inclusive: The total remuneration remains the same, but the take-home pay may decrease slightly as the super contribution increases
• Exclusive: The employer bears the additional super cost, increasing the total remuneration package
  Clarifying this distinction is essential for managing expectations and financial planning.

Budgeting and Cash Flow
The increase in SG contributions will affect your wage expenses. Incorporate this change into your budgeting and cash flow forecasts to ensure financial stability moving forward.

Tools and Resources for Employers

The Australian Taxation Office (ATO) offers several helpful tools and services:

• Superannuation Guarantee Contributions Calculator – Helps calculate the correct SG contributions for your employees
• Small Business Superannuation Clearing House – A free service to pay all your employee super contributions in one transaction (note: closing from 1 July 2026)
• SuperStream – A mandatory system for submitting super payments and data electronically

Action Steps for Compliance

To ensure a smooth transition:

• Update your payroll system to reflect the 12% SG rate
• Communicate the change with your employees
• Review employment agreements to understand remuneration structures
• Adjust your cash flow forecasts accordingly
• Seek advice from your accountant if you’re unsure how the changes apply to your business

We’re Here to Help

At Amarose Accounting, we specialise in guiding small businesses through financial changes with clarity and confidence. As a CPA Practice and one of fewer than 15 Profit First Certified firms in Australia, we’re here to help you stay compliant—and profitable.

Book a free discovery session to discuss how this change impacts your business and explore strategies to optimise your financial health.
Visit www.amarose.com.au

Disclaimer: This article provides general information only and does not constitute financial advice. Please consult with Amarose Accounting or a qualified professional to understand how these changes apply to your specific circumstances.