Superannuation guarantee increase to 10.5%
All businesses should pay superannuation on behalf of their employees and subcontractors in Australia. This is called the superannuation guarantee. In the 2022 financial year, the superannuation guarantee rate was increased to 10.5%
Since 1 Jul 2022, the Superannuation Guarantee rate surged to 10.5% from 10.0%. This will be further increased to 11%, 11.5% and 12% in FY 2024, FY 2025 and FY 2026 respectively.
Minimum salary not subject to Super guarantee is removed
In previous years, the superannuation guarantee should be paid by employers on behalf of employees only if the monthly salary is greater than $ 450.
From this financial year, the employer has to pay the superannuation guarantee to all employees over 18 years of age to expand coverage of the super guarantee.
For employees under the age of 18, the Super guarantee is only paid if the employee works more than 30 hours per week.
As a small business holder, you need to verify that this change is implanted in your accounting and payroll system to calculate the superannuation guarantee correctly.
Lowering tax instalments for small businesses – PAYG
PAYG instalments are regular prepayments made during the year of the tax on business and investment income. The actual tax payable by the taxpayer is reconciled when the tax return is lodged. If the PAYG instalments paid during the year are lower than your annual income tax, the taxpayer will have a tax liability and if not the taxpayer will get a tax refund from ATO.
In general. PAYG instalment amounts are adjusted using a GDP adjustment or uplift. For the 2022-23 income year, the Government has set this uplift factor at 2% instead of the 10% that would have applied. The 2% uplift rate will apply to small to medium enterprises eligible to use the relevant instalment methods for instalments for the 2022-23 income year up to $50 million annual aggregated turnover for PAYG instalments.
As a result of this change, small businesses will have more liquid cash in hand to be utilised in the business. It is important to note that this will not affect the yearend tax, the business has to pay. Therefore it is worth being aware and getting ready for the year-end income tax liability.
For further advice, get in touch with Rands Financial Services via https://randstax.com.au/contact-us