The new financial year has arrived, bringing significant changes to Australian taxation & payroll.

 

The first step in becoming compliant is understanding your business’ new payroll obligations. To help in this regard, we’ve examined the latest changes and summarised them for your convenience.

Fast-track your research with this guide to the 2017/18 financial year.

 

Superannuation Contribution Caps

The superannuation caps for concessional (before tax) contributions have been cut for the 2017/2018 financial year. Having come into effect since the 1st of July 2017, the general concessional contributions caps have now dropped to $25,000 for all ages.

 

Individual Income Tax Rates

Individual income tax rates for the 2017-18 financial year will remain the same as 2016-17. Since the 1st of July 2017, the Temporary Budget Repair levy of 2% of taxable income in excess of $180,000 has been removed.

 

 

Resident individual

Non-resident individual

Working Holiday Maker

(Visa 417/462 Holder) **

Taxable income

Tax Rate*

Taxable income

Tax Rate

Taxable Income

Tax Rate

0 – $18,200

Nil

0 – $18,200

32.5%

0 – $37,000

15%

$18,201 – $37,000

21%

$18,201 – $37,000

32.5%

0 – $37,000

15%

$37,001 – $87,000

34.5%

$37,001 – $87,000

32.5%

$37,001 – $87,000

32.5%

$87,001 – $180,000

39%

$87,001 – $180,000

37%

$87,001 – $180,000

37%

$180,001 and over

47%

$180,001 and over

45%

$180,001 and over

45%

*2% Medicare Levy is included
**Company will need to register with ATO as working holiday maker employer

 

Minimum Wages

The Fair Work Commission has announced a 3.3% increase in minimum wages. The increase will apply from the first full pay period from 1 July 2017 inclusive. The national minimum wage is now $694.9 per week, or $18.29 per hour.

 

Penalty Rate Cuts in Modern Awards

The Fair Work Commission (FWC) handed down a decision to cut certain penalty rate provisions across the hospitality, pharmacy, and retail industries.

The decision affects penalty rate provisions for some permanent and casual employees working on Sundays, public holidays, evenings or after midnight.

Changes will apply to the followiung awards:
– General Retail Industry Award 2010 [MA000004] (the Retail Award)
– Fast Food Industry Award 2010 [MA000003] (the Fast Food Award)
– Restaurant Industry Award 2010 [MA000119] (the Restaurant Award)
– Pharmacy Industry Award 2010 [MA000012] (the Pharmacy Award)
– Hospitality Industry (General) Award 2010 [MA000009] (the Hospitality Award)

For an in-depth look at what these changes may mean for your business and your employees, head over to our analysis on the penalty rate cut.

 

Key Rates and Thresholds

Lump Sum D Threshold

The Lump Sum D threshold has increased to $10,155 + $5,078 for each completed year of service from 1 July 2017.

ETP Thresholds

The Employment Termination Payment (ETP) indexed cap has increased to $200,000. The Whole of Income cap remains at $180,000 as this is a non-indexed figure.

Superannuation

The maximum superannuation calculation base has increased to $52,760 per quarter in 2017. This represents an annual maximum superannuation contribution of $20,048.80.

Victoria payroll tax thresholds

The Victorian Government increased the payroll tax tax-free threshold to $625,000. The payroll tax rate for Victorian businesses also decreased to 3.65% for businesses with payroll that consists of at least 85% regional employees.

 

Single Touch Payroll

Single Touch Payroll (STP) is a government initiative to streamline the declaration of wages, tax and superannuation contributions to the taxation office.

From the  1st of April 2018, employers with 20 or more employees will be required from to report wages, superannuation contributions and taxes by the payment day.

 

Processing payroll is hardly an easy feat. Not only does it require a complex understanding of surrounding regulations, but also requires in-depth knowledge on how to apply it for your particular business. Needing help with your payroll? Looking to assure compliance? Perhaps you need to outsource your payroll to a trusted partner. If still unsure of the benefits of outsourcing your payroll, check out our FAQs on why you should.

About the Author:

Crystal is Polyglot Group's Payroll Manager and an expert in International Payroll. Working with clients from all over the world, Crystal has made it her mission to bring a human approach to Payroll by sharing her technical knowledge & educating those around her.
Read more about Crystal Li.