The start of a new financial year is a good time to review your payroll processes and make sure you aren’t caught out by recent changes and review any changes of circumstances that may have occurred to your employment practices.
Minimum super guarantee has increased
From 1 July 2022 the superannuation guarantee (SG) rate increased from 10% to 10.5%. Note this will apply even if all or part of the pay period related to work performed before 1 July 2022. Please check your payroll software is using the new rate.
The $450 threshold has gone
Previously employers were not required to pay SG contributions where an employee’s salary or wages were less than $450 per month. This threshold has now been removed. From 1 July 2022 employers will be required to make their minimum SG payments for employees regardless of their earnings. [Note that part time or casual employees under 18 years who work no more than 30 hours a week will continue to be excluded from salary and wages that are subject to SG] Please check your payroll software has been updated for these changes.
Don't forget about super stapling
From 1 November 2021, most employers have been required to take an extra step when complying with the choice of fund rules. When on-boarding new employees, please ensure you have updated your processes to request stapled superfund details for new employees where they have not made a choice of which superannuation fund their superfund goes into. You can make this request via the ATO online services portal. The ATO will then advise the details of the employees stapled fund which you must make the SG contributions into.
Salary sacrifice contributions and timing reminders
A reminder that contribution caps are determined based on the date the superannuation fund receives the contribution. For employees that are close to the $27,500 concessional contribution cap, they should be aware that contributions you make for June may not be received by the fund until July, therefore they take care that they do not inadvertently exceed the cap by not counting any contributions received in July of last year.
Maximum super contributions base for 2022-23
The maximum superannuation contribution base for 2022-23 has increased to $60,220 per quarter (up from $58,920). Employers are not required to make SG contributions for employees with earnings made above this limit (you must assess this each quarter not annually).
Check your contractors - do you need to pay super?
A reminder about super and contractors. Recent cases continue to catch employers unaware that SG can apply to some individual contractors not just employees. If your contractor is an individual who works under a contract that is “wholly or principally for labour” SG may apply.
Check if you need to include payments to some contractors in your taxable wages for payroll tax
The Office of State Revenue is active in ensuring employers have included as taxable wages any payments to contractors which are “relevant contracts”. Arrangements involving services are almost always relevant contracts. It is then a matter to determine if one of the 9 exemptions apply to carve out these payments from your taxable wages amount. If you have not reviewed your contractors in a while, we recommend you ensure that no circumstances or arrangements have changed that might require these amounts to be included.
End of year STP finalisation
Check the all of the year end processes have been completed in your payroll software. This means you will have “finalised your STP reporting” to the ATO. We are finding some issues with clients where employees that have been terminated during the year are not reporting correctly. We recommend you check your STP finalisation report reconciles to your total wages report and investigate any discrepancies.
STP Phase 2
Reporting under Single Touch Payroll (STP) Phase 2 has commenced (but note many payroll software providers have been granted a deferral until the end December 2022). Please check with your provider on their planned changes and timing. In essence STP phase 2 is about breaking down your wage payments into more specific components such as Gross, Paid Leave, Overtime, Bonuses and Commission, Allowances. Each payroll software provider will have their approach on how this should be implemented.
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Ready to start talking about the changes and how it effects your business? Talk to an expert today.