Employers

Salary Sacrifice

• Significant tax savings can be achieved via salary sacrificing additional superannuation contributions or by including fringe benefits within your salary package.
• Importantly, salary sacrificing arrangements must be put in place prior to the period of service to be effective from a taxation point of view.
• With the availability of “transition to retirement income streams (TRIS’s)” (also known as “working pensions”), taxpayers who have reached their preservation age but wish to stay in the workforce can access their superannuation as a non-commutable income stream without permanently retiring. In certain circumstances it can be tax effective to salary sacrifice employment income into superannuation and use the working pension to pay living expenses.  Please contact our office if you would like to discuss this strategy further.
• If you are renegotiating your salary package for the next financial year you may wish to contact us to discuss these and other options available to you as there are a number of requirements to commence transition to retirement pensions. You should also take into account the new concessional contribution caps when working out the amount of any salary sacrifice superannuation contributions for the 2022/23 tax year.
• The amount that can be provided to employees of not-for-profit entities for salary sacrificed meal entertainment benefits has been limited to a grossed up cap of $5,000 with effect from 1 April 2016. This may reduce the tax and other benefits available to such employees from their salary sacrifice arrangements.
• Employees of small businesses (turnover under $10m from the 2016/17 financial year) may be provided with more than one work related portable electronic device, even where the functions are similar, without imposition of FBT, from 1 April 2016. Please note that from 1 April 2021 (i.e., the 2022 FBT year an onwards) the business turnover threshold has increased to $50 million.

Employer Termination Payments

From 1 July 2012 two different ETP caps apply:

• The ETP cap applies to all ETPs and limits the amount of all ETPs that can receive concessional tax treatment and the ETP tax offset. For 2023/24 that cap is $235,000 and $245,000 for 2024/25.  If the ETP exceeds this amount the balance is taxed at the top marginal rate.
• The whole of income cap of $180,000 also applies to some ETPs (golden handshakes, gratuities, unused sick leave payments etc.). Under this cap, the ETP tax offset only applies to that proportion of the ETP that, together with other taxable income, does not exceed $180,000.  The excess will be taxed at marginal rates.

Superannuation Payments by Employers

• • When an employer pays superannuation, it can be in the form of an in specie transfer of specific assets (e.g. shares or business real property) without incurring fringe benefits tax.
  • Employers receive a tax deduction for all superannuation contributions made on behalf of employees. Please note however, that tax penalties at the individual’s marginal tax rate plus an interest charge apply to concessional (pre-tax) contributions (from all sources) in excess of the following limits:

  Age in Years at year end	Concessional Contributions Cap 2021/22	Concessional Contributions Cap 2022/23	Concessional Contributions Cap 2023/24
  Any Age	$27,500	$27,500	$27,500

  • Employers with 20 or more employees have been required to comply with the new SuperStream rules since 31 October 2015.  These rules require employers to make all super contributions and associated contribution data electronically.  Employers will need certain information from each employee’s superannuation fund for this purpose as well as payroll software that conforms to SuperStream. Information required includes the details of the fund’s ABN and bank account as well as an electronic service address.  Employees with SMSFs also need to apply for this.   Smaller employers needed to comply with these rules by 28 October 2016.
  • From 1 July 2018 employers with 20 or more employees were required to report to the Commissioner through Single Touch Payroll-enabled software. The following information must be reported on or before the day you withhold from a payment (the pay day):
    1. payment information, including salary or wages, allowances, deductions, etc.
    2. withholding amounts
    3. superannuation liability information or ordinary times earnings (OTE).
  • Employers who fully report all the information required through Single Touch Payroll do not have to comply with a number of other reporting obligations under the existing law.  This includes providing certain payment summaries and the corresponding payment summary annual report. They will need to provide a finalisation declaration through the relevant software.
  • STP became mandatory from 1 July 2018 for employers with 20 or more employees.  Once you are setup, the option to report a payment to the ATO will be presented for each pay run and your payroll information will be filed with the tax office. Please contact us to discuss this further if you have any questions.
  • From 1 July 2019, STP was broadened to include all employers (i.e., including employers with 19 or less employees).
  • The new reporting rules essentially require ‘real time’ reporting of salary and wages, PAYG withholding and superannuation information to the ATO directly from their payroll software, giving the ATO almost instant access to key tax-related information.

Superannuation for the Self-Employed

• • • • From 1 July 2017, individuals earning[1] more than $250,000 have their concessional superannuation contributions taxed at 30% rather than 15%. Despite this increased rate, concessional superannuation contributions can still be a tax effective strategy for higher income earners.

      [1] For this purpose earnings includes taxable income, concessional superannuation contributions, adjusted fringe benefits, total net investment losses, target foreign income, tax free government pensions and benefits, less child support.

    • A tax deduction for superannuation contributions was available to self-employed, or substantially self-employed, persons. Deductibility has been expanded to all taxpayers under age 75 from 1 July 2017.
    • Superannuation is only deductible when paid. Contributions for the June 2024 quarter must be received by the relevant Fund by 30 June 2024 for a deduction to be claimed in 2023/24.
    • Contributions for the self-employed are tax deductible. Please note that unfortunately tax penalties apply if you exceed the contribution caps so be sure to confirm with us if you have any questions (the concessional contributions cap is $27,500 for the 2024 financial year and $30,000 for the 2025 financial year).
    • Contact us prior to 30 June if you believe the above contribution limits have been exceeded.
    • Taxpayers aged 18 to 67 years do not need to pass a work test in order to be able to make personal concessional superannuation contributions. Taxpayers aged 67 years to 75 years will need to have worked in gainful employment for at least 40 hours in a consecutive 30 day period in that same financial year, to claim a tax deduction for personal concessional contributions. Taxpayers aged 75 years or older are unable to make personal superannuation contributions.

Living Away from Home Allowance (LAFHA) 

• Changes were made to the LAFHA rules that, with the exception of “fly in fly out” arrangements:
  • Limit LAFHA availability to employees who maintain a home available for their own use in Australia, which they are required to live away from for their work;
  • Limit LAFHA availability to a maximum of 12 months
• The changes applied from 1 July 2012 for new arrangements and from 1 July 2014 for arrangements entered into prior to budget night 8 May 2012.
• Please note that an employee’s usual place of residence cannot be rented or sublet during the employee’s absence.

Employee Share Plan Changes

The following changes took effect from 1 July 2015, effectively repealing some of the more onerous 2009 provisions in relation to stock rights/options.

Share rights will now be subject to tax at the earliest of:

• When the employee ceases the employment in respect of which the right was acquired;
• Fifteen years after acquisition;
• When there are no longer any genuine restrictions on disposal of the right (i.e. the right can be sold) or real risk of forfeiture of the right; and
• When the right is exercised and shares acquired which are not subject to restrictions.

These changes mean that rights schemes, which contain a real risk of forfeiture, can access tax deferred treatment to the time of exercise of the right where the scheme rules state that tax deferred treatment applies and the scheme genuinely restricts an employee from disposing of the right.

Certain small start-up unlisted companies may be eligible for the start-up concession which provides that an employee does not include a discount on ESS interest in assessable income at grant and that any gain is taxed under the CGT provisions on disposal.

Superannuation Guarantee (SG) – 2024

• Contributions of 11% of gross salary (up to a maximum salary of $62,270 per quarter i.e., $249,080 p.a.) must be made for most employees for the year ended 30 June 2024.  There is no longer any upper age limit for superannuation guarantee contributions.  Superannuation is only deductible when paid.   Contributions for the June 2024 quarter must be received by the relevant fund by 30 June 2024 for a deduction to be claimed in 2023/24.
• Before 1 July 2022, you did not have to pay super guarantee for a worker earning less than $450 a month. You now have to pay regardless of their earnings.
• According to Taxation Ruling TR 2010/1, a contribution by electronic funds transfer (EFT) is not made until the amount is credited to the fund’s bank account.
• If superannuation contributions for the June 2024 quarter are not received by the relevant fund by 30 June 2024, they must be received by 28 July 2024 to be tax deductible.
• If contributions are not received by the fund within 28 days after the end of the relevant quarter, the employer will be subject to the SG charge, a non-deductible payment consisting of the contribution shortfall, interest and administration penalty. The employer is required to self-assess their liability and lodge a SG Statement with the ATO and pay the SG liability by the 28^th day of the second month following the end of the quarter.
• While late paid contributions may in some circumstances be offset against the SG shortfall amount, the requirement to lodge an SG Statement and pay the interest and administration penalty remains.
• The SG rate is 11% for 2023/24 and will increase to 11.5% on 1 July 2024.
• From 29 June 2012, directors became personally liable to pay penalties for any unpaid Superannuation Guarantee Charge, as well as PAYG amounts withheld but not remitted. This change in the law can prevent a director from escaping liability by placing the company into administration or liquidation.

Employee Payslip Obligations– Superannuation Payments

• The Fair Work Ombudsman requires that you report on employees’ payslips the amount of super contributions for that pay period.