The new financial year has arrived, bringing significant changes to Australian taxation & payroll.
The first step in remaining 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 2021 / 2022 financial year.
Superannuation Employer Contribution Rate Increase
The Super Guarantee increases to 10% (from 9.5%) as of 1st of July 2021.
This will have an impact on your Australian operations, from a budgetary perspective.
Individual Income Tax Rates
Individual income tax rates for the 2021-22 year are as follows:
The above rates do include the Medicare levy of 2% for tax residents.
Please note that from the 1st July 2021, the STSL tax free threshold increased from $46,620 to $47,014.
Furthermore, should you employ Working Holiday Makers, your business will need to register with the ATO.
The Fair Work Commission has announced a 2.5% increase to the national minimum wage. The increase will apply from the first full pay period starting on or after the 1st of July 2021.
The national minimum wage will be $772.60 per week, or $20.33 per hour. The hourly rate has been calculated by dividing the weekly rate by 38, on the basis of the 38-hour week for a full-time employee.
The increase of minimum wages will also apply to Modern Award, but at 3 different dates.
Group 1 – 1 July 2021
Group 2 – 1 September 2021
Group 3 – 1 November 2021
Refer to this link to check which group applies to your company award to commence the new minimum wages.
Note that this may have an impact on your Australian operations, from a budgetary perspective.
Key Rates and Thresholds
1. Lump Sum D Threshold
The Lump Sum D threshold will increase to $11,341 + $5,672 for each completed year of service.
2. ETP thresholds
The ETP indexed cap is changed to $225,000 from 1st of July 2021.
The Whole of Income cap remains at $180,000 as this is a non-indexed figure.
3. Quarterly Maximum Employer Super Contribution Cap
Will increase to $5,892 per quarter from 1st of July 2021. (This represents an annual equivalent of $23,568)
4. Quarterly Maximum Employee Contribution Base
For the financial year 2021-22, the maximum quarterly employee contribution base is $58,920.
5. Overtime Meal Allowance
For the financial year 2021-2022, the reasonable amount for overtime meal allowance is $32.50.
6. Cents per km – car
For the financial year 2020 / 2021, when employees use their own car for business-related travel, they should receive 72 cents per kilometre allowance to help cover the costs.
7. Government Parental Leave Pay has increased to $772.55 per week.
8. Payroll tax thresholds – FY 2021 – 2021
New South Wales (NSW)
Payroll tax threshold is $1,200,000 a year. Tax rate remain 4.85%.
There are changes to Victorian payroll tax from the 1st July 2021.
The payroll tax threshold will be increased from $650,000 to $700,000.
There are no changes to the normal payroll tax rate, which will remain at 4.85%.
The regional employer rate will reduce from 2.02% to 1.2125%.
The mental health and well-being levy will be introduced from 1 January 2022. The mental health and well-being levy is a payroll tax surcharge on wages paid in Victoria by businesses with national payrolls over $10 million in a financial year. A rate of 0.5% will apply for businesses with national payrolls above $10 million. Businesses with national payrolls above $100 million will pay an additional 0.5%.
The Apprentice and Trainee payroll tax rebate has been extended for another 12 months until 30 June 2022. The scheme provides for a 50% rebate in relation to taxable wages paid to eligible apprentices and trainees, in addition to those wages already being exempt from payroll tax.
South Australia (SA)
The SA Budget extended the 12-month payroll tax exemption for wages paid to eligible new apprentices and trainees for a further year. Wages paid to apprentices and trainees who commence a relevant training contract up to 30 June 2022 will be exempt from payroll tax for the first 12 months. The exemption applies from the training contract commencement date.
Western Australia (WA)
Not released as yet. Stay tuned for updates.
There are 2 payroll tax thresholds and rates for the 2021-22 financial year.
Australian Capital Territory (ACT)
Threshold $2,000,000. Rate 6.85%
Victoria’s Wage Theft Legislation
Victoria has become the first state in the country to pass laws on establishing criminal penalties for employers who deliberately underpay or don’t pay their workers.
The legislation is effective from the 1st of July 2021.
Employers who dishonestly withhold wages, superannuation or other employee entitlements, will face fines of up to $198,264 for individuals, $991,320 for companies and up to 10 years’ jail.
Offences will also capture employers who falsify employee entitlement records, such as payroll records, or who fail to keep employment records.
New record keeping offences are aimed at employers who attempt to conceal wage theft by falsifying or failing to keep records. No longer will employers be able to avoid being held accountable through deliberate dishonest record keeping practices.
The Wage Inspectorate of Victoria will be established as a new statutory authority with powers to investigate and prosecute wage theft offences.
Employers who make honest mistakes or who exercise due diligence in paying wages and other employee entitlements will not be subject to the legislation.
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.