by Paul Quealey
In advance of the new financial year that is just about to start, we thought it was important to remind businesses of a number of changes in the wages, superannuation, and income tax areas.
You may already have measures in place to handle these changes, but as some of these changes have only been recently announced or finalised in recent weeks, it’s a good idea for all businesses to have a quick review of the changes below.
Increase in Superannuation Guarantee
From 1 July 2021, employers are required to contribute 10% of an employee’s earnings/salary to an eligible superannuation fund under the Superannuation Guarantee Scheme. This is an increase from the 9.5% rate that has been in place for a number of years.
We understand major payroll systems have these changes in place, but business should check the calculation of superannuation for employees in the first pay run post 1 July to ensure that your payroll system is correctly calculating superannuation under the new rate.
Superannuation Contribution Limits
From 1 July 2021, the annual contribution limit for concessional (deductible) and non-concessional contributions (non-deductible) increases as per the below table:
|Concessional Contributions||Non-Concessional Contributions|
|$27,500||$110,000 or $330,000 over 3 years|
As a result of changes made by Federal Government on 22 June 2021, individuals under the age of 67 years old (previously 65 years) may also be eligible to make non-concessional contributions of up to three times the annual non-concessional contribution cap in a single year.This is an increase from the previous contribution limits of $25,000, and $100,000.
The total member superannuation balance limit in determining if a member is able to access non-concessional contributions also increases from $1.6 million to $1.7 million.
In addition to the above, members who obtained early access to their superannuation as a result of COVID-19 financial hardship measures during the 2019/20 and 2020/21 financial years are able to contribute these amounts back into their superannuation funds, between 1 July 2021 and 30 June 2030, without exceeding the non-concessional contributions cap. These recontributions are not entitled to be treated as a tax deduction by the taxpayer.
Members of Self Managed Superannuation Funds
On 23 June 2021, royal ascent was given to changes to superannuation laws to increase the number of eligible members in a Self Management Superannuation Fund (SMSF) from four to six members. This increase in the number of members is effective from 1 July 2021.
Increase in Minimum Wage
The Fair Work Commission announced the increase in the minimum wage of 2.5%. This increase will apply to all award wages, with the changes effective from 1 July 2021. However, for COVID-19 impacted industries (i.e. retail, hospitality, tourism, registered clubs etc), these increases are deferred to 1 September 2021 or 1 November 2021. Full details of awards eligible for the deferred increases are located at https://www.fairwork.gov.au/about-us/news-and-media-releases/website-news/annual-wage-review-2021.
Minimum Pension Limits
At the commencement of the COVID-19 pandemic, the Federal Government reduced the minimum pension limits by 50%. These measures continue into the 2021/22 financial year, with minimum pensions being calculated on the below rates:
|Age||Minimum yearly payments as a percentage of account balance||Temporary reduced minimum yearly payment|
Single Touch Payroll and Closely Held Business
From 1 July 2021, amounts paid to closely held payees will need to be reported to the ATO through Single Touch Payroll (STP). For small employers (19 or fewer payees), reporting of these amounts can be reported on or before each payday, or reported on a quarterly basis (first quarter being September 2021). A closely held payer is where a business only has the owners as employees of the business. Until now they have been exempt from the STP rules.
For large employers (20 or more payees), closely held payees must have payments subject to withholding reported on or before each payday.
Company Tax Rate
From 1 July 2021, the company tax rate for companies with aggregated turnover of less than $50million reduces to 25% from 26% in the 2021 year. The tax rate for all other companies remains at 30%. This is the final reduction of company tax approved by the Federal Government.
Instant Asset Write-off
As part of the May 2021 Federal Budget, the instant asset write-off for the business portion of eligible assets acquired has been extended for the 2021/22 financial year. The eligibility and extent of the write off depends upon a number of factors (i.e. business turnover, value of the asset).
How We Can Help
If you’re unsure of how these changes may apply to you or your business, please contact us below or call (02) 4969 6600 to discuss your situation further.