Superannuation Guarantee Hits 12% on 1 July 2025

From 1 July 2025, the Superannuation Guarantee (SG) rate will increase to 12%. This marks the final stage in a series of scheduled increases that began in 2021—an important milestone in Australia’s retirement savings strategy. For small and medium-sized business owners, this change is more than just a minor payroll tweak—it’s a compliance checkpoint with serious financial implications if overlooked.

What’s Changing?

The Super Guarantee is the minimum percentage of ordinary time earnings that employers must contribute to their eligible employees’ superannuation. On 1 July 2025, the SG rate will rise from 11.5% to 12%, completing the government’s phased approach to strengthening the retirement income system.

What Do Employers Need to Do?

Whether you have two employees or 200, it's essential to:

• Update your payroll software and systems: Make sure the SG rate is adjusted to 12% before your first payroll run in the new financial year.

• Review employee agreements and contracts: If your employment contracts include super as part of a total remuneration package, check whether the increase affects take-home pay.

• Communicate with your team: Be transparent about how the change will be managed—particularly if it has any impact on salary packaging arrangements.

Consequences of Getting It Wrong

Failing to meet your obligations under the new SG rate can trigger penalties from the Australian Taxation Office (ATO). If you don’t contribute the correct amount by the quarterly due date, you may be liable for the Superannuation Guarantee Charge (SGC)—and it’s not cheap.

The SGC includes:

• The amount of super owed (calculated on a broader earnings base)

• Interest (10%) from the start of the quarter

• A $20 admin fee per employee, per quarter

Unlike regular super payments, the SGC is not tax deductible, which adds further sting to the penalty.

Need Help Staying Compliant?

At Essential HR, we work with SMEs across Australia to ensure payroll and super compliance is seamless, accurate, and stress-free. If you’re unsure how this increase will affect your business or need help updating your payroll systems, reach out to our expert team today.