With the Federal Budget now announced, businesses can take stock of the proposed changes and plan for next year. With that in mind, we’ve outlined some key changes and proposals that may affect you and your business, with a specific focus on how much the Federal Budget affect the payroll industry in 2017/18.
What are the ATO individual income tax rates for 2017-18?
|Taxable Income||Tax on this income||Rates|
|$0 – $18,200||Nil||0%|
|$18,201 – $37,000||19c for each $1 over $18,200||19%|
|$37,001 – $87,000||$3,572 plus 32.5c for each $1 over $37,000||32.5%|
|$87,001 – $180,000||$19,822 plus 37c for each $1 over $87,000||37%|
|Over $180,000||$54,232 plus 45c for each $1 over $180,000||45%|
As an employer, it’s imperative that you use the most recent tax scales to ensure that your employees are paying the correct tax rate, as set out above. You can find a list of all tax tables here.
What are the changes to Superannuation?
The Superannuation guarantee rate has not changed. It remains at 9.5%.
As an incentive for first home buyers, the Government is proposing to introduce allowing voluntary contributions to superannuation made from 1 July 2017 to be withdrawn for a first home deposit. This is capped at $15,000 per year and $30,000 in total. For couples, both individuals will be able to take advantage of the incentive, allowing for a total of up to $60,000 between them.
However, the concessional contribution cap will continue to apply. An individual can make concessional contributions of up to $25,000 in the 2017-18 financial year, comprised of compulsory employer contributions as well as employee voluntary contributions, including those made under the First Home Super Saver Scheme.
The scheme is to be overseen and administered by the ATO, which will govern what amounts can be accessed and then issue the appropriate instructions for release of the funds to the superannuation fund.
What are the changes in PAYG reporting?
From 1st July 2017, employers can begin to report through Single Touch Payroll (STP). This is not mandatory, although businesses over 20 employees will need to be STP compliant by 1 July 2018. A headcount of employees will need to take place on 1 April 2018.
What is the Skilling Australians Fund levy?
Subsequent to the termination of the 457 visa, businesses employing foreign workers on certain skilled visas will need to pay a levy to provide revenue for a new ‘Skilling Australians Fund’. More information on the fund can be found here. The aim is to generate $1.5 billion over the first four years in order for Australians to receive the training and skills required to be job-ready.
The Levy is effective from March 2018 and will cost up to $5,000 per year.
What about the ‘Backpacker Tax’ for foreign employees on Working Holiday Visas?
No further changes to the new measures that have been in effect since January 1st 2017, whereby 15% should be withheld for every $1 up to $37,000. Foreign Resident Tax Rates apply from $37,001. It is now essential to register with the ATO if hiring employees on a working holiday visa.
With the introduction of the First Home Super Saver Scheme, employers can probably expect to see an increase in requests for salary sacrifice contributions to superannuation. But as the legislation is not yet finalised, at this point there is no information available about what this will mean for employers and the processing of the contributions. Information is beginning to be available however regarding the implementation of Single Touch Payroll. You can follow the latest ATO updates here.