as featured in the Farm Weekly issue 17 June 2021
You’re leaning up against the bar, the beer is cold, your crew are on the dance floor moving to a familiar beat. However, the next band is warming up. You’re not familiar with their new realeases, but they are coming. The Morrison band have legislated the following tunes from 1 July 2021;
- Broadening of Single Touch Payroll (STP)
- Increase of superannuation guarantee charge
- Increase of concessional (tax deductible) and non-concessional (non tax-deductible) superannuation contributions limits
- Decrease of the company tax rate
Broadening of Single Touch Payroll (STP)
STP will be required for all closely held employees. This means the wages business owners pay themselves or their children/parents must be reported via an STP system. Those businesses not currently using an STP system will need to have one. We recommend clients use the software system they use for their bookkeeping or KeyPay. KeyPay is simple to use, and you only pay per pay-run, which makes it a cost-effective option.
Increase of superannuation guarantee charge
The superannuation guarantee charge rate will increase from 9.5% of gross ordinary time earnings to 10%. Business owners will be forced to pay the higher rate, but the employees will not necessarily see this as a benefit to them. For example, an employee earning $100,000 per year will have an additional $500 per year contributed to their super fund.
Increase of concessional (tax deductible) and non-concessional (non tax-deductible) superannuation contributions limits
Concessional superannuation contributions will increase from $25,000 to $27,500, making it possible to contribute a bit more and the ability to claim a tax deduction. For a taxpayer with an average tax rate of 25% this is an additional $625 personal tax saving. Non-concessional contributions will also increase from $100,000 to $110,000, allowing people to build their funds for retirement.
Decrease of the company tax rate
The company tax rate will decrease from 26% to 25%. This is a good opportunity to pay a slightly lower rate of tax going forward in this structure.
A point of interest is we are seeing an increase of tax office correspondence regarding overdue tax debts. These are coming through often and quickly after outstanding amounts are not paid. This is in line with the tax office's more aggressive approach to debt recovery. Given all the money that has been paid out it is not surprising the Morrison band is ensuring payments are being made.
But like any changes, embrace them, get to know the rhythm, because you are going to have to join the dance 1 July.
To discuss this article further, we encourage you to contact Lea Williams on (08) 9853 9300, or your Byfields accountant.
Disclaimer: This content provides general information only, current at the time of production. Any advice in it has been prepared without taking into account your personal circumstances. You should seek professional advice before acting on any material.