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Removal of $450 eligibility threshold for super guarantee in QuickBooks Online

by Intuit Updated 8 months ago

On 1 July 2022, the Australian Government will remove the $450 minimum monthly income threshold for superannuation guarantee contributions. This means that all eligible employees, regardless of how much they earn, will be entitled to receive employer super guarantee payments. 

In this article, we’ll explain how this change will affect new and existing employees and show you how to manually change the super threshold settings in your QuickBooks Online.

What does it mean?

This means that the super threshold of $450 will no longer be applied when adding new employees to QuickBooks Online.

As an employer, you’ll be required to make super contributions to all eligible employees regardless of how much the employee is paid each month. However, certain existing exclusions may still apply.

How is an employee’s super eligibility threshold currently setup in QuickBooks?

The super threshold amount for all your employees in QuickBooks is set at $450 by default. You can review/change this amount at any time if you need to. Here’s how:

  1. Go to Payroll and select Employees.
  2. Select the employee name to see their employee details.
  3. Select Pay Run Defaults.
  4. Look for the Super Threshold field. If you need to make changes:
    1. Tick the Override checkbox. 
    2. Enter the amount. 
  5. Save.

Notes:

  • The default value and the override functionality will be the same whether you create, update or import employee data into QuickBooks. 
  • If an employee is assigned to a pay rate template, the super threshold amount for that employee is controlled by the pay rate template itself. This means that it can’t be overridden at the employee level. You’ll need to go into the pay rate template and make the changes from there.

Pay rate templates and super threshold setting 

The super threshold amount can only be changed from the pay rate template itself. This means that if you have an employee linked to a pay rate template, you won't have the option to change the super threshold at the employee level. 

Any changes made to the super threshold amount from the pay rate template will flow through to all employees attached to that template.

How will the employee’s super threshold setting be set up in QuickBooks from 1 July 2022?

From 1 July, there will be no super threshold ($450) applied to when adding new employees in QuickBooks. 

For existing employees, the default threshold setting will change as follows: 

  • If the ‘Apply a threshold’ is not ticked, this means that the employee doesn’t have a super threshold amount and will be paid super contributions on all OTE earnings, no matter how much their total monthly earnings amount.
  • If the employee still needs a threshold applied, tick the ‘Apply threshold’ amount and enter the amount. This will mean that the employee will only be paid super contributions on their OTE earnings once the employee has earned a threshold amount. If their earnings for that month don’t meet the threshold, then no super will be paid to that employee. 

Note: You should only change the threshold amount for employees where no super is to be calculated on their earnings at all. 

For example, if you have high income earners who have opted out of super or self-employed and choose not to be paid super, and share pay categories with employees that are eligible for super. 

If these employees don't share pay categories with eligible employees, and the pay category super rate value is 0, then there'll be no need to set a super threshold amount in the employee's pay run defaults page. 

What threshold setting should I apply for employees under the age of 18?

Even with the removal of the $450 monthly eligibility threshold, employees under the age of 18 the eligibility criteria for working more than 30 hours a week remains. 

QuickBooks will continue to check the weekly hours that are processed in a pay run to determine whether super is owed to the employee. 

Make sure that the ‘Apply a threshold amount’ is not ticked for employees under the age of 18. Otherwise, this may result in an underpayment of super contributions.

Will the settings change for existing employees from 1 July, 2022?

QuickBooks will only update the super setting for employees that meet the super eligibility criteria. No super threshold is applied to pay runs with a date paid of 1 July 2022, and onwards. 

Here are a few scenarios where QuickBooks will automatically update existing employee settings:

QuickBooks will automatically update the employee's super setting to have no threshold from 1 July, 2022. Super contributions will be calculated on all employee earnings, regardless of the amount, on all pay runs with a date paid of 1 July 2022 onwards.

The Hospitality Award and Restaurant Award both provide a lower threshold for salary or wages to be taken into account for super, being $350 per month. The ATO decided to have this removed, which means that employees covered by these awards will also have no monthly eligibility threshold effective from 1 July 2022.

QuickBooks Online won’t automatically update the employee’s super setting where: 

  • a business has installed either the Restaurant Award or Hospitality Award (as part of the platforms pre-packaged Awards library); and
  • an employee within that business is attached to a pay rate template included in either pre-packaged Award.

There’ll be an award update notifying all affected businesses by 1July 2022. The update will include the removal of the super monthly threshold amount. 

Once the update is made, which should only be done once the final pay run for the 21/22 FY has been finalised, this will update the employee's super setting to have no super threshold applied for any pay runs with a date paid of 1 July 2022 and onwards.

Note: If you create and assign pay rate templates to your employees, you’ll need to manually update the super threshold setting. The award update will only update settings for pay rate templates that are linked to the pre-packaged Award. 

To see if an employee is attached to a pay rate template: 

  1. Go to Payroll and select Payroll Settings.
  2. Select Pay Rate Templates (located in Pay Conditions).
  3. Find your pay rate template. This will show all the pay rate templates that exist and how many employees are linked to them.

QuickBooks will keep the employee's super setting to have no super threshold. This means that for all pay runs with a date paid of 1 July 2022 and onwards, there will continue to be no threshold and super will be calculated on all employee earnings regardless of the amount.

QuickBooks won't automatically update the employee's super setting, but will keep that super amount that currently applies to the employee. All pay runs with a date paid of 1 July 2022 and onwards will continue to apply the minimum threshold when calculating super on this employee's earnings. 

Review employee threshold settings

It’s always good idea to do a quick audit of your payroll data. You can make sure your employees’ super threshold settings are correct by exporting the employee data and following these steps:

  1. Go to Payroll, and then select Employees. 
  2. From the Add Employees dropdown options, select Export.
  3. Select Sync with QuickBooks for the Data Type. 
  4. To export all your employee data, select All.
  5. Select Sync
  6. In the employee export file, look for the 'SuperThresholdAmount' column.
  7. Filter the column to remove any blanks or '0' values. 

Employees who have the threshold value of $350 and assigned to a pay rate template to either the Hospitality or Restaurant Award, wait until the applicable award update is made before making any further changes. Be sure that all FY 21/22 pay runs are finalised and closed off too.

If the employee is assigned to a business-created pay rate template, then take note of these employees as they'll need to be manually updated.

For employees with any other value, you should check what their threshold should be, if any, from 1 July 2022. If you need to make any changes, follow the steps listed in 'How is an employee's super eligibility setup in Quickbooks?'.

Content sourced from Employment Hero
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