If I’ve said it once… planning is key. And there are a few changes coming from July 1, 2021 so best be prepared to take any actions required to get compliant and to enact any tax minimisation measures prior to June 30. You will then be set for the new financial year.
Superannuation Concessional Contributions - what needs to happen prior to June 30, 2021
The current year maximum tax deductible ‘concessional’ superannuation contribution per working individual is $25k. This contribution ‘cap’ is for any amounts that will be claimed as a tax deduction either contributions made by your employer or yourself personally. If you do intend to make additional superannuation contributions to claim as a tax deduction in your 2021 tax return you must ensure you do not exceed your cap and that your super fund(s) receives the contribution prior to June 30, 2021. Allow enough time for the payment to be processed and that you are eligible to make the contribution.
Additionally, you may be able to make a ‘catch-up’ contribution, being the ‘unused’ portion of the 2019 and 2020 concessional limits of $25,000 each year where you have a total member balance of less than $500k across all your super funds. This means a much larger tax deduction this year, provided you meet all the requisite criteria - something to discuss with your accountant without delay.
For any contribution you plan to make to your superannuation fund(s), please verify the amount you are entitled to contribute with your superannuation fund PRIOR to making any contributions to avoid adverse tax consequences and potential penalties.
For any employer superannuation, due 28 days after the end of each quarter, remember that unlike other expenses superannuation is only tax deductible when paid and receipted by the fund(s). Which means, even though any employer superannuation you are due to pay for the quarter ending June 30, 2021, isn’t due until July 28, 2021, you won’t get a tax deduction for that superannuation until the 2022 tax year. If you would like to bring forward the tax deduction, ensure all employer superannuation is paid before June 30, 2021.
Employer Superannuation Guarantee - 10 percent from July 1, 2021
From July 1, 2021, all employer’s superannuation obligations on wages increases from 9.50 percent to 10 percent. If you have any employees paid salary inclusive of super, you should let them know their net take home pay will be impacted unless you intend to increase pay to compensate. For all employees you need to ensure your payroll system is updated and ready for the change to ensure you are set to meet your employer obligations in the new year.
Further, the May 2021 budget announced the removal of the superannuation guarantee threshold, meaning that no longer will wages be exempt from super where an employee is paid less than $450 in a month. This has not yet been legislated and may or may not eventuate but something to bear in mind when considering your ongoing labour costs.
As always, please ensure you are reviewing how you are paying workers to ensure you are meeting any deemed employer obligations. We are seeing so much focus on employee entitlements and ATO reviews of employer obligations, it is critical that you understand what is required of you. Head to the ATO website and work through the ‘Employee/contractor decision tool’ if you are uncertain, it’s handy to save the results of that process for any future ATO review if you have bona fide contractors rather than employees.
Single Touch Payroll (STP) - mandatory for all employers from July 1, 2021
There are no more extensions to be had, if you report any wages for unrelated employees or owner operators/family members, your business must be STP ready for payroll reporting from July 1, 2021.
Single Touch Payroll replaces the old PAYG Summary (and older Group Certificate) system and reports payroll information such as wages, PAYG Withholding, superannuation etc. live to the ATO for each pay period.
In order to comply you must have STP-enabled payroll software, so the information is reported or ‘filed’ every time you pay your employees. It can sound daunting, but I believe the new software programmes are very user friendly and if you need any assistance in setting things up or managing your payroll reporting going forward, contact your accountant or bookkeeper without delay.
Importantly, setting this up on July 1, 2021, is too late, you need to be ready beforehand to ensure you meet your reporting obligations.
Disclaimer: This article contains general information only. Regrettably, no responsibility can be accepted for errors, omissions, or possible misleading statements or for any action taken as a result of any material in this guide. It is not designed to be a substitute for professional advice, as such a brief guide cannot hope to cover all circumstances and conditions applying to the law as it relates to these items.