End of Financial Year (EOFY) concerns for employers

8 things employers need to know for FY2016

From 1 July 2015, there are 8 key changes that will affect payroll, superannuation, minimum wages, award-based employees and employers in general.

Here’s what you need to know….

1. The minimum wage increases

The Fair Work Commission has announced a 2.5% increase to minimum wages. This increase will apply from the first full pay period starting on or after 1 July 2015. The new national minimum wage will be $656.90 per week or $17.29 per hour.

Action. Review wages for all employees who get their pay rates from the national minimum wage, a modern Award or a registered agreement. The Fair Work Commission have been issuing new pay rate schedules over the past two weeks. Even if your employees are not bound by an Award or instrument, double-check their pay doesn’t slip below the minimum.

Red flag. Do you have interns or commission-based employees with below-minimum wage arrangements? Give us a call to discuss.

2. Ongoing Superstream reforms 

SuperStream is a government reform aimed at improving the efficiency of the superannuation system. Under SuperStream, employers must make super contributions on behalf of their employees by submitting data and payments electronically in a consistent and simplified manner.

Action.  What you need to do depends on the size of your business.

For medium to large employers with 20 or more employees, SuperStream started from 1 July 2014. From that date, employers needed to start implementing SuperStream and have until 30 June 2015 to meet the SuperStream requirements when sending superannuation contributions on behalf of employees.

For smaller employers with 19 or fewer employees, SuperStream starts from 1 July 2015. You have until 30 June 2016 to meet the SuperStream requirements when sending superannuation contributions on behalf of your employees.

3. Limits to maximum SG contributions increase  

The maximum Superannuation Guarantee contributions base will increase to $50,810 a quarter from 1 July 2015 – up from $49,430 a quarter.

Action. Check for any employees who are paid a base salary of $203,240 or more – the maximum SG contribution is now $19,307.80.

4. Redundancy Base limits increase

Genuine Redundancy and Early Retirement scheme payments will see the base limit increase to $9,780 and the “complete year of service amount” increase to $4,891 per year of service.

Action. Double-check these tax-free limits as they will apply to any genuine redundancy calculations from 1 July 2015.

5. Unfair dismissal threshold increases

Currently this threshold sits at $133,000.  From 1 July 2015 it will increase to $136,700.

This means an employee with earnings exceeding this threshold cannot bring an unfair dismissal claim through the Fair Work Commission unless they are covered by an Award or EBA.

Action. Make sure you consider the threshold when terminating employment.

6. Paid Parental Leave and return to work changes

In its recent budget, the federal government proposed to change access to the existing Paid Parental Leave scheme (PPL) of 18 weeks at the minimum wage.

Action. Nothing yet, but watch this space. Under the proposed arrangements, employees can’t ‘double dip’ and are only entitled to payment under the PPL if their employer’s scheme pays less than 18 weeks at the minimum wage. Even then they will only be entitled to any difference between the two.

7. Tax changes for foreign workers 

Form 1 July 2016, overseas nationals on working holiday visas will no longer be able to access the tax free threshold available to residents.

Action. Workers on these kinds of visas will be required to pay 32.5% tax for every dollar earned up to AUD$80,000. Employers need to make this deductions for PAYG purposes.

8. FBT changes for NFP and public sector health workers 

Not-For-Profit and public sector health workers will have new FBT exemptions available to them. Meal and entertainment benefits will be reportable and capped at AUD$5,000 each financial year.

Action. Employers and employees should be aware that this will reduce the number of meal and entertainment tax exemption claims available to these workers and requires them to be reported.

If you need any assistance with these changes please contact us.