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SMEs hurting from Super Guarantee increase: Survey

Patrick Buncsi15 May 2024
Superannuation Guarantee challenges

Nearly two out of three small and medium businesses (SMEs) in Australia report that the steadily rising Superannuation Guarantee is having a major impact on their businesses and remains a top regulatory bugbear.

Both SMEs with declining or stable growth (67%) and those in a revenue growth phase (60%) identified the rising superannuation guarantee as their leading regulatory pain point, according to figures from ScotPac’s SME Growth Index Report, now in its 10th edition.

The super guarantee is the minimum amount of super an employer are required to pay to their employees.

From 2014 to 2021, Australian private sector employers were required to pay 9.5% of each eligible employee’s earnings into their nominated superannuation fund.

Since 2021, and in line with changes to the Superannuation Guarantee Act, this figure has incrementally increased to the current 11% rate. Two further increases are planned – to 11.5% in July 2024 and 12% in July 2025 – where it will remain until further amendments may be made to the Act.

According to the survey respondents, the rising Superannuation Guarantee obligations now outweigh in impact new labour laws and ramped-up ATO collection activities as the top regulatory challenge for SMEs.

ScotPac chief executive Jon Sutton noted that the current economic climate has made SMEs “particularly sensitive to any cash flow and administration impacts associated with regulatory change, which explains why the super guarantee is a particular pain point”.

“Unlike large corporations, SMEs generally don’t have dedicated teams to interpret regulatory changes, implement compliance measures and redraft company budgets.

Among the other regulatory challenges flagged by surveyed SMEs as major challenges to their businesses include employment laws & regulations (cited by 58% of respondents), company tax and ATO collection activities (cited by 51%) and BAS complexity (cited by 43%).

More than one in three (39%) also expressed difficulties in their management of payroll tax rates.

Around 97.3% of all businesses in Australia (accounting for a total of 2.5 million entities) are small businesses (0-19 employees), with a further 2.5% being medium businesses (64,559), those employing 20-199 employees, according to Australian Bureau of Statistics (ABS) figures.

The 10th annual SME Growth Index Report was conducted by East & Partners for ScotPac, a specialist SME lender, interviewing more than 700 SMEs with annual revenues of A$1-20 million.


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31 minutes ago

If small businesses are hurting now, they will be hurting even more in a couple of years when they have to pay 12% SG, and it must be paid at the same time as wages. The compulsory super rules are becoming an increasing disincentive to small businesses directly employing staff. No wonder there is a big shift to using “self employed contractors” rather than employees.