Superannuation guarantee increase on 1 July

Employers should be managing the super guarantee (SG) increase which comes into effect 1 July

An SG base rate rise is set from 1 July which will increase from 9.5% to 10%, followed by incremental half percentage point increases each year to 12% on 1 July 2025.

Businesses owners should establish an approach strategy to the increase now because missing deadlines is likely to attract ATO attention. And it should be done with transparency that clearly communicates how employees’ payslips will be impacted.

Employers should keep in mind that this is not a one-off increase.

While the legislation is for the employer to contribute the extra half per cent without impacting take-home wages, this may not be the case across all workplaces. Check with us first for any clarification required about your business or sector.

Employee contributions are required to be paid on at least a quarterly basis. Employers are urged to brace for the SG increase on 1 July by allowing plenty of time for payroll changes via business activities that sustain cash flow.

Do note that software providers will be making the adjustment to their systems but, depending on your setup, if you have manually entered a rate you may need to adjust this.

Click here to review the ATO’s super rates and thresholds or contact Notch Above’s Bookkeeping specialists Australia-wide on 1300 015 130 for specific advice about your payroll.

Australian Accounting Awards Bookkeeping Firm of the Year Finalists 2021 and 2020.

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Single Touch Payroll changes

What small businesses need to know about changes to STP this EOFY

As a small business owner, you’ve likely heard about Single Touch Payroll (STP) by now.

Many employers will already be using STP. However, with the ATO rolling the initiative out in stages, there are still some that have been offered exemptions. That is, until now.

From 1 July this year, most small businesses will need to be STP compliant.

This includes small employers with closely held payees, as well as some micro-businesses and seasonal employers. The changes could mean that you have to opt into STP for the first time or start filing employees who aren’t already being reported with the ATO. If you’re feeling unsure about whether these changes will affect your business, we’ve compiled all the information you need to help determine your next steps.

Although EOFY is just around the corner, there’s still time to get prepared. With the help of your bookkeeper and Xero, together, we can make the transition to STP as smooth as possible.

What does ‘closely held’ mean?

According to the ATO a closely held payee (otherwise known as a closely held employee) is an individual directly related to the entity from which they receive payments. For example, this would include relatives in a family business, or beneficiaries of a trust fund.

Depending on your working arrangements, some businesses process irregular or infrequent pay runs for family members on their books. That’s why, up until 1 July 2021, small employers (with 19 or fewer payees) have been exempt from STP reporting of closely held payees.

What’s changing with how my business remunerates closely held payees?

By the end of FY21, employers with fewer than 19 employees will have to report closely held salaries or wages through STP. Whether it’s your sister, great-uncle, cousin or in-law, every family member on your books, counts. There are three payment reporting requirements to be aware of:

  1. Report and process payroll through STP on or before payday
  2. Report the accurate payroll amount with STP once per quarter, on or before the BAS due date
  3. Report a reasonable estimate with STP once per quarter, on or before the BAS due date

Out of the three reporting options, there’s no one-size-fits-all approach – it comes down to what works best for your business’ needs.

Are there any other changes to know about?

As well as small employers with closely held payees, some micro and seasonal employers will now have to report on or before the payment date – not quarterly – unless they receive a concession. This includes businesses with four or fewer employees, including the following industries:

  • Agriculture, fishing and forestry
  • Not-for-profit clubs and associations
  • Seasonal and intermittent employers

Microbusinesses in each category may still be eligible for STP reporting concessions, such as quarterly or exceptional circumstances exemptions. Ask your advisor about how you can apply for a concession, and head over to the ATO website for more details.

The STP changes for this EOFY are one of the final hurdles in transitioning most Australian small businesses to a more streamlined reporting system. Although the initiative is still evolving, with the support of Xero and your trusted bookkeeper, you’ll be able to tackle any new changes head-on.

Notch Above Bookkeeping has been providing business owners with accurate and timely bookkeeping services that makes them more efficient and gives them peace of mind for 15 years. Let us help take your business to the next level of bookkeeping digitally, via the cloud! Call us on 1300 015 130.