With a new financial year on the horizon, there’s a number of changes that business owners will need to be aware of in order to stay compliant. From superannuation contributions to a rising minimum wage, here’s what you need to know for the 2022–23 financial year.
Superannuation guarantee rising to 10.5%
For several weeks now, the Australian Taxation Office (ATO) has urged business owners to get on top of superannuation changes. From 1 July, several changes to how you manage your employees’ super contributions will come into effect.
The largest of which is the superannuation guarantee rate. Over the past decade, the super guarantee has risen from 9% (as of 30 June 2013) to its current rate of 10%. From 1 July 2022, that figure will increase to 10.5%, and an additional 0.5% every year thereafter until it reaches 12% on 1 July 2025.
Business owners should stay across changes such as this and account for the increased superannuation liabilities in your finances. Helpfully, accounting software like Xero will make this change for you automatically.
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One final tip around processing superannuation: If your tax advisor has recommended that you pay accrued super guarantees before EOFY, then make sure you do so immediately so that they can be processed by the receiving fund before 30 June.
Superannuation contributions cap to be scrapped
Up until now, business owners haven’t had to pay super to most employees earning less than $450 per month. However, from 1 July onwards this cap is being removed. That means you’ll need to pay super to all workers over the age of 18 — regardless of how much they have worked during the course of a month.
Also be aware that employees under the age of 18 will now require super payments if they work more than 30 hours per week — no matter how much they earn. So now is a good time to go back to your books to make sure you are prepared for these changes to superannuation payments.
Minimum wage going up
On Wednesday 15 June, the Fair Work Commission announced the new minimum wage would increase by 5.2%. That equates to $21.38 per hour, or $812.60 per week. The modern award minimum wage is also rising by 4.6% for weekly wages above $869.60; wages below that amount will earn an extra $40 per week.
The move, which will become active on 1 July 2022, is set to benefit more than 180,000 workers around Australia. For some business owners, this rise may have an impact on their cash flow, so it’s important to use the time before EOFY to speak to your accountant or financial advisor about the impact a minimum-wage increase will have on your operations.
Indexation update of STSL
While it won’t impact business owners directly, the indexation of Study and Training Support Loans (STSL) may be a talking point among your staff. It’s a good idea to familiarise yourself with this year’s indexation rate, which is set at 3.9% (up from 0.6% last year), as your employees may ask you questions about their compulsory repayments.
The most common loans impacted by the indexation rate include:
- Higher Education Loan Program (HELP – formerly known as HECS)
- VET Student Loan (VSL)
- Student Financial Supplement Scheme (SFSS)
- Student Start-up Loan (SSL)
- ABSTUDY Student Start-up Loan (ABSTUDY SSL)
- Trade Support Loan (TSL)
Make EOFY easier with accounting software
End of financial year is not only a busy time for business owners, it can also get a bit confusing with tax obligations, changes to superannuation payments and government reporting.
The best way to streamline these tasks while also reducing headaches is by using the right accounting software. Choosing a cloud accounting platform like Xero means many of these complex end-of-financial-year compliance changes are handled for you, so you can focus on what you love: your business.
Xero is a cloud-based accounting software platform for small businesses with over 3 million subscribers globally. Through Xero, small business owners and their advisors have access to real-time financial data any time, anywhere and on any device. Xero offers an ecosystem of over 1,000 third-party apps and 300 plus connections to banks and other financial partners.