The new financial year is here. By understanding key new financial year 2022-23 changes, you can apply them to your business. You can then take steps early to address them properly. You can also see if you are on track by checking our last article on ‘to dos’ for the end of the financial year 2021-22.
The following points highlight some key changes for the new financial year 2022-23. You can incorporate them into your business plans to help ensure compliance.
1. Financial Year 2022-23 Changes to Superannuation
Changes to Superannuation Guarantee (SG) rates.
Payment of the SG for the financial year 2021-22 is due 28 July 2022. From 1 July 2022, the SG rate will be increased to 10.5% from 10%. The new rate of 10.5% is to be used to calculate super on payments made on or after 1 July. Payment is required for some or all work done before 1 July.
Looking ahead, the SG rate is legislated to increase to 12% by 2025.
Removing the $450 per month threshold for Super Guarantee eligibility.
The new financial year 2022-23 introduces changes as to who is eligible for superannuation and how much is to be paid. The $450-per-month threshold for super guarantee was removed July 1, 2022.
For example, employees under 18 are now entitled to SG payments if they work more than 30 hours in a week . This is regardless of how much they’re actually paid. Conversely, these employees are not entitled to superannuation for the hours worked, if it is under 3o hours for the week.
If you are an employer, make sure your payroll and accounting systems are updated for super payments made after 1 July 2022. This ensures SG entitlements are calculated correctly for your employees and can save having issues later on.
2. Changes to STP Phase 2
Details for STP requirements for end of financial year 2021-22 were covered in our previous article End of Financial Year 2021-22 Business ‘to dos’.
The STP Phase 2 reporting (an updated version of STP) has been mandatory since 01 Jan 2022 . The latest version, STP Phase 2, includes a few changes intended to benefit both employees and employers. The STP Phase 2 does however remain consistent with the original version regarding:
- the way of lodgement,
- due date,
- types of payments,
- tax and super obligations, and
- end-of-year finalisation requirements.
However, there are key changes in reporting that apply to the following items.
- Disaggregation of gross i.e. reporting separately of gross, paid leave, allowances, overtime, bonuses and commissions, directors’ fee, lump sum W, and
salary sacrifice rather than a single gross amount. - Employment and taxation condition i.e. employment basis, TFN declaration and details of when and why employees leave.
- Income types for specific tax purposes.
- Country codes used to differentiate between overseas employees.
- Child support garnishes and deductions – to reduce separate remittance advice to the Child Support Registrar.
- Reporting previous Business Management Software IDs and Payroll IDs – required to fix issues with duplicate income statements for employees in ATO Online services.
3. Minimum Wage
With the Labor party elected in May 2022, the current prime minister Anthony Albanese has endorsed a minimum wage rise of at least 5.1%. The intent is to keep pace with inflation. Every year, the Fair Work Commission’s (FWC) Expert Panel reviews the minimum wages received by employees in the national workplace relations system. The decision is based after consideration of information from various sources.
The current national minimum wage is $20.33 per hour or $772.60 per week (before tax). The national minimum wage applies to casual employees who also receive at least a 25% casual loading. Changes in the minimum wage are required to be implemented immediately.
4. Stocktake
Stocktake is the process of counting and checking all products, goods, or inventory in a business to verify business records. The value of the trading stock at the end of the financial year must be verified for both business and tax purposes. Stocktake should be done as close as possible to the end of each income year. For tax purposes, increased stock value is assessable income while a decrease is an allowable deduction. Additionally, the closing stock for the end of one income year automatically becomes opening stock for the next income year.
You can review further details of requirements in our previous article End of Financial Year 2021-22 Business ‘to dos’.
5. Review debtors
At the end of the financial year, it is important to analyse your accounts receivables. A review shows how much, and for how long, money is owed to the business. Once you have reviewed debtors, you can identify bad debts and record them as such for tax purposes.
Next Steps
Key to a successful start to a new financial year is to use a checklist ‘to does’ that applies to your business and tick off as completed. This will help achieve business compliance and smooth financial operations. If you require guidance and assistance contact us.
Important Reminder for company directors: New Director ID
If you are a company director you are required to apply and meet the new directors ID requirements by 30th November. Check our previous article for more detail by clicking here. Although we can’t apply for a director ID on your behalf, we can help you decide if you need to apply.