Current news from our news service

Hot Issues
spacer
10% Super Guarantee from 1st July 2021
spacer
End of year financial strategies
spacer
Closely held payees: STP options for small employers
spacer
Videos to help understand accounting topics.
spacer
ATO Small Business Newsroom - May / June
spacer
New insolvency rules commence
spacer
ATO sheds light on crypto compliance focus
spacer
Post Federal budget reflections
spacer
Federal Budget 2021 - Overview
spacer
Building a more secure and resilient Australia
spacer
Federal Budget 2021 - Health
spacer
ATO signals crackdown on 4 ineligible work-from-home claims
spacer
Taxpayers urged to keep work-from-home records
spacer
Businesses feeling ‘adverse’ impacts of COVID-safe measures: ABS
spacer
New insolvency rules commence
spacer
ATO promises not to ‘destroy’ businesses as it resumes debt collection
spacer
5 strategies for successful ‘work from home’ policies
spacer
Small businesses: don’t forget your FBT concessions
spacer
ATO chases $172bn in undeclared contractor income
spacer
‘Penalties will resume’: ATO flips the switch on debt recovery
spacer
JobMaker Hiring Credit rules and reporting
spacer
ATO data-matching: JobMaker
spacer
A broad range of Calculators.
spacer
ATO Small Business Newsroom
spacer
ATO’s good-faith approach to crypto won’t last much longer
spacer
‘Much more complex’: ATO introduces new partnership profit guidelines
Article archive
spacer
Quarter 1 January - March 2021
spacer
Quarter 4 October - December 2020
spacer
Quarter 3 July - September 2020
spacer
Quarter 2 April - June 2020
spacer
Quarter 1 January - March 2020
spacer
Quarter 4 October - December 2019
spacer
Quarter 3 July - September 2019
spacer
Quarter 2 April - June 2019
spacer
Quarter 1 January - March 2019
spacer
Quarter 4 October - December 2018
spacer
Quarter 3 July - September 2018
spacer
Quarter 2 April - June 2018
spacer
Quarter 1 January - March 2018
spacer
Quarter 4 October - December 2017
spacer
Quarter 3 July - September 2017
spacer
Quarter 2 April - June 2017
spacer
Quarter 1 January - March 2017
spacer
Quarter 4 October - December 2016
spacer
Quarter 3 July - September 2016
spacer
Quarter 2 April - June 2016
spacer
Quarter 1 January - March 2016
spacer
Quarter 4 October - December 2015
spacer
Quarter 3 July - September 2015
spacer
Quarter 2 April - June 2015
spacer
Quarter 1 January - March 2015
spacer
Quarter 4 October - December 2014
Quarter 1 of, 2015 archive
spacer
ATO states estimates are acceptable
spacer
Hockey considers super access for first time home buyers
spacer
Reportable Fringe Benefit Amount - Employer Reporting
spacer
Simple Mistake on Share Transfer
spacer
ATO highlights billions in forgotten super
spacer
In a bankruptcy what does a trustee do?
spacer
Bankruptcies, what are they?
spacer
SMSF trustees unprepared for new collectibles rules
spacer
We wish all our clients a Merry Christmas, a Happy New Year and a restful holiday
spacer
Employee Christmas Parties and Gifts – Any FBT?
spacer
Breaking down the latest ATO determination on TRIS
10% Super Guarantee from 1st July 2021

 

Business leaders should turn their attention to how they plan on managing the government’s increase to the superannuation guarantee, set to come into effect from 1 July, to avoid penalties, says one tax expert.

 

       

An increase to the superannuation guarantee (SG) is set to go ahead from 1 July which will see the base rate rise from 9.5 per cent to 10 per cent, followed by incremental half percentage point increases each year to 12 per cent on 1 July 2025.

John Jeffreys, tax counsel at Tax & Super Australia, warns that businesses should establish their approaches to the increase early, because non-payment, underpayment and late payments of as little as 24 hours are likely to attract the attention and penalty from the ATO.

“We haven’t had guidance from the ATO about any grace period or lenience for employers who don’t meet this new SG obligation,” Mr Jeffreys said.

He said that businesses are likely to act in the interest of their bottomline, but warned that regardless of how they approach the change, they should do so with transparency and clearly communicate how their approach will impact their employees’ payslips. 

“While the policy of the legislation is for the employer to contribute the extra half a per cent without impacting take-home wages, this may not be the case across all workplaces,” Mr Jeffreys said.

“As well as considering how much room they have within their profit margins, business products or activities to best cater for this increase, employers should keep in mind that this is not a one-off increase.

“They’ll need to prepare for the SG to go up 0.5 [of a percentage point] annually until it reaches 12 per cent in 2025.”

The warnings follow the release of a survey conducted by consultancy firm Mercer which looked at the steps Australian businesses are taking to prepare for the SG increase. 

The results showed that, of the 145 firms surveyed, 46 per cent of respondents were still establishing a position and continue to assess the full cost of the SG increase to their organisation. 

Of the businesses currently offering their staff a base-plus-super package, 62 per cent of respondents said they’d meet the full cost of the SG increase and maintain their employees’ take-home pay. 

Meanwhile, almost two-thirds of the firms surveyed who have a total package arrangement in place — one where superannuation is bundled in with an employee’s salary — said that their staff would be left to bear the brunt of at least some of the cost imposed by the increase. 

Australian Council of Trade Unions secretary Sally McManus told a panel discussion at an Australian Institute of Superannuation Trustees conference on Tuesday that the changes would offer employers a legal opportunity to cut the take-home salaries of their staff. 

However, she expects the cohort of employees to suffer a pay cut to be small.

“There would only be some very discrete circumstances where employers could unilaterally cut people’s take-home pay on 1 July,” Ms McManus said. “That would be a very small circumstance where employers could do that, just straight out legally do that.

“The issue of low wage growth is a big structural problem unrelated to the super issue, and it would be if super was going up or if it was not going up.”

While the increase has been legislated for some time, Minister for Superannuation, Financial Services and the Digital Economy Jane Hume wavered on whether the increase could be held back by further delays as recently as March. 

Speaking to ABC News Breakfast in March, Ms Hume said the SG would come “at a cost” and could result in slowed wage growth. 

“Money doesn’t grow on trees and there is a good chance that if there is an additional cost to employers when they pay that extra 0.5 [of a percentage point] that it will come at the expense of potentially wage rises in the future,” Ms Hume said.

“The Prime Minister has said that he will assess the situation closer to the time based on the best information available to him at the time, the best economic information available to him at the time.”

The Morrison government’s 2021–22 federal budget didn’t include any changes to the legislated SG increase, which is set to come into effect from 1 July.

 

 

John Buckley 
20 May 2021 
accountantsdaily.com.au

 

site By PlannerWeb