EOFY changes: their impact on your business
With a new fiscal year on the horizon, there are a number of changes that business owners will need to be aware of in order to stay compliant. From pension contributions to raising the minimum wage, here’s what you need to know for the 2022-23 fiscal year.
The pension guarantee increases to 10.5%
For several weeks now, the Australian Taxation Office (ATO) has been urging business owners to keep up to date with changes to superannuation. As of July 1, several changes in the management of your employees’ super contributions will come into effect.
the largest of which is pension guarantee rate. Over the past decade, the super guarantee has grown from 9% (as of June 30, 2013) to its current rate of 10%. From July 1, 2022, this figure will increase to 10.5%, then an additional 0.5% each year until it reaches 12% on July 1, 2025.
Business owners need to stay through changes like this and factor increased retirement obligations into their finances. Fortunately, accounting software like Xero will make this change automatically for you.
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One final tip regarding superannuation processing: if your tax advisor has recommended that you pay out accrued Super Collateral before EOFY, be sure to do so immediately so that it can be processed by the receiving fund. before June 30th.
The ceiling on pension contributions will be abolished
Until now, business owners didn’t have to pay extra for most employees earning less than $450 a month. However, from July 1, this cap is removed. This means you will have to pay super for everything workers over the age of 18, regardless of the duration of their work in a month.
Also be aware that employees under 18 will now need superpayments if they work more than 30 hours per week, regardless of salary. So now is a good time to go back to your books to make sure you’re ready for these changes in superannuation payments.
Minimum wage on the rise
On Wednesday June 15, the Fair Work Commission announced the the new minimum wage would increase by 5.2%. This equates to $21.38 per hour or $812.60 per week. The modern granted minimum wage also increases by 4.6% for weekly wages above $869.60; salaries below this amount will earn an additional $40 per week.
The decision, which will come into effect on July 1, 2022, is expected to benefit more than 180,000 workers in Australia. For some business owners, this increase may impact their cash flow, so it’s important to use the time before EOFY to talk to your accountant or financial advisor about the impact a minimum wage increase will have on your operations.
STSL indexing update
Although it does not directly impact business leaders, Education and Training Support Loan (STSL) indexation may be a topic of discussion among your staff. It’s a good idea to familiarize yourself with this year’s indexing rate, which is set at 3.9% (against 0.6% last year), because your employees may ask you questions about their mandatory reimbursements.
The most common loans affected by the indexing rate include:
- Higher Education Loans Program (HELP – formerly known as HECS)
- VET Student Loan (VSL)
- Financial Supplement Scheme for Students (SFSS)
- Student Starter Loan (SSL)
- ABSTUDY Start-up Student Loan (ABSTUDY SSL)
- Trade Support Loan (TSL)
Make EOFY easy with accounting software
The end of the financial year is not only a busy time for business owners, it can also be a bit confusing with tax obligations, changes to superannuation payments and government reporting.
The best way to streamline these tasks while reducing headaches is to use the right accounting software. Choose a cloud accounting platform like Xero means many of these complex year-end compliance changes are handled for you, so you can focus on what you love: your business.
Read now: Four tax tips for maximum cash back this EOFY