29 June 2022

An increase in the national wage and higher superannuation payments are among a raft of changes starting on July 1 that small and family businesses must be aware of, says Bruce Billson, the Australian Small Business and Family Enterprise Ombudsman.

“With so many pressures on small business owners and managers as we near the end of the financial year it can be easy to overlook the new rules that will apply from the start of the next financial year – which is this Friday,” Mr Billson said.

“However, this is not something that can be put aside for another day.

“It is essential that small business owners and managers understand what they are required to do. They should check their payroll and accounting systems have been updated and they should talk to trusted advisers.”

Below, is a list of just some of the changes that take effect from July 1. It is not a complete list and some changes that may affect your business are specific to industry sectors or states.

National Minimum Wage and Award Rate

The recent Annual Wage Review 2021-22 from the Fair Work Commission has delivered two important announcements.

The National Minimum Wage will increase by $40 per week, which amounts to an increase of 5.2%. Award minimum wages will increase by 4.6%, which is subject to a minimum increase for award classifications of $40 per week and based on a 38-hour week for a full-time employee.

More information is available on the Fair Work Ombudsman’s website.

Sign up to email updates so you know when the new rates are available in the Fair Work Ombudsman’s Pay and Conditions Tool and pay guides.

Super Guarantee

Employers will be required to make superannuation guarantee contributions to their eligible employee's super fund regardless of how much the employee is paid. Previously no super was required for employees earning less than $450 a month. This threshold has been scrapped. Employees must still satisfy other super guarantee eligibility requirements.

The super guarantee (SG) rate will also increase from 10% to 10.5% for all employees eligible to receive superannuation. You'll need to use the new rate to calculate super on payments you make to employees on or after 1 July, even if some or all of the pay period is for work done before 1 July. The SG rate is legislated to increase to 12% by 2025.

Employers should check their payroll and accounting systems have been updated to ensure they correctly calculate their employee’s super guarantee entitlement.

More information.

Employers paying super to an employee for the first time will also have to comply with changes that took effect from November 1, 2021, and check with the ATO in cases where an employee does not choose a super fund if they have a “stapled super fund”. This is an existing super account which is linked, or 'stapled', to an individual employee so that it follows them as they change jobs. This rule aims to stop new super accounts from being opened every time an employee starts a new job.

More information.

Commonwealth Government Agencies & eInvoicing

From January 1, 2020, Commonwealth agencies capable of receiving Peppol eInvoices began paying eligible eInvoices within 5 days, otherwise they faced paying interest on any late payments. All Commonwealth agencies are mandated to adopt eInvoicing by July 1, 2022.

The ATO is currently supporting agencies to meet their obligations, engaging with them and providing a range of tools and templates.

If you are a Government trading partner, you may benefit from transitioning to eInvoicing. More information.

Single Touch Payroll (STP) is an Australian Government initiative to reduce employers' reporting burdens to government agencies. Payroll information includes salaries and wages, pay as you go withholding and superannuation.

The STP Phase 2 employer reporting guidelines help outline what is required for reporting through STP Phase 2-enabled software.

Refer to the Employer STP Phase 2 checklist and the Tax and BAS professional STP Phase 2 checklist.

More info: mandatory reporting.

Changes to tax-deferred employee share schemes

New rules for employee share schemes will come into effect that change how employees are taxed on shares they receive. Employees will no longer be liable to pay tax on their shares if they leave a business after July 1, 2022, and the business will no longer have to report this to the ATO.

But employees will still be required to pay tax at other taxing points under a tax-deferred scheme, and this will need to be reported using existing labels.

Covid-19 test expenses

Sole traders, contractors and employees who paid for a COVID-19 test for a work-related purpose can claim a tax deduction for the 2021-22 tax year. The test must have been taken for a work-purpose such as determining if you could attend or remain at work.

This covers PCR (polymerase chain reaction) testing through a private clinic and others covered by the Australian Register of Therapeutic Goods, including RAT (rapid antigen test) kits. You must have a receipt and if you have purchased a multi-pack of COIVID-19 tests, can only claim for the portion of tests used for work purposes.

More information

Cars and Tax

The following car threshold amounts apply for the 2022–23 financial year.

Income tax: The car limit is $64,741. This is the maximum value that can be used for calculating depreciation on the business use of a car first used, or leased, in the 2022–23 income year.

Goods and services tax: If you purchase a car and the price is more than the car limit, the maximum GST credit you can claim (except in certain circumstances) is one-eleventh of the car limit, which is $5,885.

You can't claim a GST credit for any luxury car tax you pay when you purchase a luxury car, regardless of how much you use the car in carrying on your business.

Luxury car tax (LCT): $84,916 for fuel-efficient vehicles in line with an increase to the motor-vehicle purchase sub-group of the Consumer Price Index (CPI) and $71,849 for all other luxury vehicles, in line with an increase in the “All Groups” CPI.

Remember, the LCT value of a car generally includes the value of any parts, accessories or attachments supplied or imported at the same time as the car.

More information

Research and Development Tax Incentive

Research and Development Tax Incentive reforms announced in the 2020–21 Budget now come into effect.

For companies with an aggregated turnover of $20 million or more, the Government will introduce a two-tiered premium that ties the rates of the non-refundable R&D tax offset to the incremental intensity of the R&D expenditure as a proportion of total expenditure for the year. The new rates will be the claimant's company tax rate plus:

8.5 percentage points for R&D expenditure up to 2 per cent R&D intensity

16.5 percentage points for R&D expenditure above 2 per cent R&D intensity

For companies with an aggregated turnover below $20 million, the refundable R&D tax offset will be a premium of 18.5 percentage points above the claimant's company tax rate.

The R&D expenditure threshold increases from $100 million to $150 million per annum.

Additionally, the changes improve the transparency of the program by publicly disclosing R&D claims, greater enforcement activity and improved program guidance to participants, and through amendments to technical provisions.

The loss carry back tax offset tool is now available.

This helps work out if you are eligible to claim the loss carry back tax offset and to calculate the maximum amount of tax offset you can claim.

It provides a printable report with all the information you provided, your eligibility, the maximum amount of tax offset claimable, the disclosures for each label in the company tax return that would be required to make your loss carry back claim.

You can use the loss carry back tax offset tool when preparing your company tax return for the 2020–21 or 2021–22 income year.

More information 

Tax Time Tool Kit

Finally, the assist small business to prepare their tax returns, the ATO have released the 2022 Tax Time Toolkit for small business (ato.gov.au) which includes a directory of links to find information, tools, calculators and other support and resources.

Fact sheets include new information on claiming deductions for digital expenses.

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