Australian Budget Update 2017/2018

activpayroll wishes to inform customers of the recent updates to the Australian Budget

Superannuation

  • In July 2017 the Minister for Revenue announced that the Government will introduce a Bill into Parliament this year that will ensure an individual's salary sacrifice contributions do not reduce their employer's superannuation guarantee obligation;

  • As of 1 July 2017, changes were made to the Australian superannuation contributions caps: 

In Australia, employees are allowed to make a salary sacrifice to contribute to their superannuation fund, this salary sacrifice is before tax and as such is a tax efficient way of saving. The tax-free amount that can be contributed is subject to a cap and this has now changed.

Previously, the maximum amount of concessional superannuation contributions (e.g. employer paid and salary-sacrificed contributions) that could be paid in a financial year were as follows: For individuals aged 49 or over – up to AUD 35,000 per annum and for individuals under 49 – up to AUD 30,000 per annum. As of 1 July 2017, the maximum amount of concessional contributions which can be made during a financial year (e.g. between 1 July and 30 June) is AUD 25,000 per annum, regardless of age. An employee whose total contributions in a year exceed the contribution cap may be liable for additional tax on the excess contributions.

We encourage all our customers who have employee’s salary sacrificing superannuation to review existing arrangements as they may need to be reduced in line with the new superannuation caps. Once a new arrangement has been made, please ensure that this is communicated to activpayroll as part of the monthly payroll input. activpayroll will continue to process any existing salary sacrifice until further notice, even if this may lead to additional tax liabilities, as we are unable to intervene or supersede an existing instruction from our customers.

  • On 29 August 2017 the government announced a further package of reforms to give the ATO near real-time visibility over superannuation guarantee (SG) compliance by employers. Importantly, the package will roll out Single Touch Payroll (STP). Employers with 20 or more employees will transition to STP from 1 July 2018 with smaller employers [ie with 19 or less employees] moving to STP from 1 July 2019. This is designed to reduce the regulatory burden on business and transform compliance by aligning payroll functions with regular reporting of taxation and superannuation obligations.

Payroll Tax

The 2017-18 WA Budget was recently handed down. Key payroll tax measure:

  • A "temporary Budget repair levy will be placed on major corporates through a new, progressive payroll tax scale" to be implemented from 1 July 2018. This levy will be in place for a finite period of 5 years, under which employers with Australia-wide payrolls between $100 million and $1.5 billion will be taxed at a marginal rate of 6% (currently 5.5%), while those with a payroll exceeding $1.5 billion will be taxed at a marginal rate of 6.5%.

The 2017-18 Victorian Budget was recently handed down. Key payroll tax measures:

  • The payroll tax-free threshold will be increased from $575,000 to $625,000 with effect from 1 July 2017, and to $650,000 with effect from 1 July 2018;
  • The payroll tax rate will be reduced by 25% from 4.85% to 3.65% for businesses where at least 85% of their employees are ‘regional employees.

The 2017-18 SA Budget was recently handed down. Key payroll tax measure:

  • As of 1 July 2017, the payroll tax rate for businesses with Australian taxable payrolls between $600,000 and $1.0 million will be lowered from the current rate of 4.95% to 2.50%. The payroll tax rate will then phase up to the rate of 4.95% for businesses with Australian taxable payrolls above $1.5 million.