With July 1 just around the corner, small businesses need to change how they pay their employees, what they pay them and how much tax they pay on those wages.
As is always the case at this time of year, there’s a lot of information to get across.
Let’s start with wages, lest anyone get a visit from the Fair Work Ombudsman.
New minimum wage and penalty rates
Back in May, the Fair Work Commission (FWC) handed down a 3% pay rise for Australia’s 2.2 million lowest paid workers.
It’s a smaller increase than the 3.5% increase last year and will see the national minimum wage increase from $719.20 per week, or $18.93 an hour, to $740.80 per week, or $19.49 an hour.
That’s a $21.60 per-week increase per worker employed.
The minimum wage typically applies to employees covered by modern Awards in the national workplace system, although some awards have special arrangements determined by the FWC.
Penalty rates under the Retail, Hospitality, Pharmacy and Fast Food Awards are also changing again from July 1.
Casuals under other Awards? No changes.
Pay rates are determined by the specific duties and responsibilities of individual workers under their Award though, so make use of the FWO’s handy pay calculator to determine exact rates.
Penalty rate changes for casuals
From July 1, Sunday penalty rates for casuals under the Retail Award will decrease from 185% to $175%.
Casuals under the Fast Food Award will cop a drop from 160% to 150% on Sundays.
Sunday penalty rates for casuals under the Pharmacy Award will decrease from 205% to 190% from July 1.
Penalty rate changes for part-time/full-time workers
Full-time and part-time workers under the Retail Award will see a cut to their Sunday penalty rates, from 180% to 165%.
For Sunday shift workers the penalty rate is moving from 195% to 190%.
From July 1, full- and part-time workers under the Pharmacy Award will also experience a Sunday penalty rate cut, moving from 165% to 150%.
Meanwhile, the Sunday penalty rate for full- and part-time workers under the Fast Food Award will decrease from 135% to 125%.
Sunday penalty rates for employers with part-time and full-time workers under the Hospitality Award are moving from 160% to 150% from July 1.
Payroll tax is changing
Everyone’s favorite state-based tax is changing, at least if you’re doing business in Victoria or NSW.
Elsewhere? No changes on July 1, but if you’re wondering how your state stacks up, check this out.
There were a few changes to Victoria’s payroll tax regime outlined in the state’s recent budget.
From July 1 2019, wages paid to employees on paternal leave (as well as maternal leave) will be exempt from payroll tax.
The first tranche of payroll tax reductions for regional businesses will also come into effect. This will reduce payroll tax for eligible businesses in the state from 2.4% to 2.1%.
By July 1 2022, the regional payroll tax rate in Victoria will decrease to 1.2%.
For all other businesses in Victoria, the rate and threshold won’t change on July 1. That’s 4.85% for businesses paying at least $650,000 in wages annually.
New South Wales
The headline payroll tax rate in NSW is 5.45%, and this won’t change come July 1.
What is changing is the wages threshold, determining who has to pay in the first place.
As part of a multi-year plan, the threshold (annual) in NSW will increase to $900,000 from July 1, up from $850,000.