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Support for delaying SG increase gains ground

Australian Small Business and Family Enterprise Ombudsman Kate Carnell has urged the government to defer legislated superannuation guarantee increases for two years to relieve the strain on small businesses.

Business Jotham Lian 11 September 2020
— 1 minute read

In a letter to Treasurer Josh Frydenberg, Ms Carnell told the government to hold off on increasing the superannuation guarantee for two years to reduce the financial impact on businesses already struggling through COVID-19.

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The superannuation guarantee is scheduled to increase by 0.5 of a percentage point to 10 per cent from 1 July 2021, before incrementally rising to 12 per cent by 2025.

Ms Carnell said the government should also consider cutting the 15 per cent tax on compulsory employer superannuation guarantee contributions to 7.5 per cent for two years.

She said the combined measures would offset each other, ensuring that workers would end up with a similar superannuation amount as they would have under the scheduled increase.

“We have to get the balance right by ensuring small businesses aren’t hit with rising costs and workers are no worse off,” Ms Carnell said.

“Many small businesses are already struggling to stay afloat as a result of the COVID-induced recession and cannot afford to pay higher costs.

“These increased costs would put small-business owners under even more financial strain, placing jobs and businesses at risk.”

The government is actively considering the issue, with Mr Frydenberg previously stating that circumstances had changed and the timing of the legislated increase would need to be considered.

Labor is set to oppose a delay, with former Labor prime ministers Paul Keating and Kevin Rudd labelling the potential plan to halt an increase in super as “cowardly”.

“Under the cowardly talk of the COVID crisis, they want to gyp ordinary people by 2.5 per cent of their income for the rest of their life,” Mr Keating said.

The ASBFEO’s proposal comes after Chartered Accountants Australia and New Zealand also called for a pause to the increase in compulsory superannuation.

“The events of this year, from bushfires to pandemics, have been extraordinary, with small businesses financially slammed,” said CA ANZ superannuation leader Tony Negline.

“Coronavirus has meant a decline in turnover and difficulty with cash flow, with many struggling just to keep staff employed.

“Adding yet another layer of expenses to small businesses during a recession lacks common sense — it could result in stagnant wage growth, limited investment and the continued fall in employment.”

Support for delaying SG increase gains ground
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Jotham Lian

Jotham Lian

Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.

Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.

You can email Jotham at: This email address is being protected from spambots. You need JavaScript enabled to view it. 

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