The 2018/19 financial year is well and truly in full swing.
As payroll and HR professionals, we know firsthand how difficult it is to remain on top of all the changes coming into effect at this time of the year.
To get you up-to-date, we have put together a short cheat sheet.
Single Touch Payroll
In case you have been living under a rock, Single Touch Payroll came into effect for any company with 20 or more employees on 1 July 2018.
Single Touch Payroll changes the way businesses report to the ATO and Definitiv was one of only a few providers in the market, ready to go for the July deadline.
For more information on Single Touch Payroll, read our blog here.
National Minimum Wage Update
The Fair Work Commission last month announced an increase in the national minimum wage.
From 1 July 2018, the national minimum wage increased by 3.5% to $719.20 per week (or $18.93 per hour based on a 38-hour week).
In monetary value, this is an increase of $24.30 per week or 64 cents per hour.
The new national minimum wage comes into effect from the first full pay period after the 1 July 2018.
Supported Employment Services Award 2010 Changes
Changes relating to supported wages within the Supported Employment Services Award 2010, came into effect on 1 July 2018.
As part of updates to Schedule D, employees eligible for a supported wage are no longer entitled to a minimum weekly payment.
Under the Supported Employment Services Award 2010, an employee’s minimum supported wage is calculated based on a percentage of the minimum pay rate for the employee’s relevant classification. The percentage is determined by either the employee’s assessed work capacity (rounded to the nearest whole percentage) or 12.5%, which ever is higher.
For example, if an employee has a 60% work capacity, they would receive 60% of the minimum pay rate for their classification within the Supported Employment Services Award 2010.
New ETP Thresholds
From 1 July 2018, the employment terminations payment (ETP) indexed cap increased to $205,000, up from $200,000 last year.
The whole-of-income cap has remained unchanged at $180,000, as this is a non-indexed figure.
ETPs include lump sum payments paid upon resignation, retirement or death. For more information on ETP payments and thresholds, visit the ATO website here.
Increase to Lump Sum D Limit
Payments for redundancy and early retirement are tax-free, up to a specified limit based on an employee’s years of service with the company.
The tax-free proportion falls outside of the ETP and is instead reported under Lump Sum D.
Any amount paid above the tax-free limit does fall within an employee’s ETP.
The tax-free limit is calculated as: Base amount + (service amount × years of service).
For the 2018-19 financial year, the base limit has increased from $10,155 to $10,399 and the service amount has increased from $5,078 to $5,200.
You can find out more about redundancy and early retirement scheme payments on the ATO website.
Maximum Superannuation Contributions Base (MSCB)
The maximum super contribution base is the maximum income limit per quarter of which an employer is to provide minimum super contributions. An employer is not obligated to provide minimum support for the part of earnings above this limit.
The indexed income amount for the 2018-19 financial year has increased by $1,270 to $54,030 per quarter. This equates to $5,132.85 in superannuation liability.
Superannuation Rollover Concessional Cap
From 1 July 2018, you can utilise unused portions of concessional caps from prior years (up to 5 years’ worth) in the following financial years.
The first year in which you can access unused concessional contributions is 2019–20.
To be able to ‘carry-forward’ any unused amount, your super balance must be less than $500k at the end of the previous financial year.
The following table provides an example of how the rollover concessional cap works.
|Year 1||Year 2||Year 3||Year 4||Year 5|
|Cap per year||$25K||$25K||$25K||$25K||$25K|
|Contributions (per year)||$10K SG |
$5K SAL SC
|–||–||$10K SG |
$5K SAL SC
|Remaining cap (carries over)||$10K||$35K||$60K||$70K||$85K|
Individual Taxable Income Bracket Changes
Another major talking point leading up to the new financial year was the changes to the individual income tax brackets.
The below table shows the new taxable income brackets for the 2018-19 financial year.
|Taxable income||Tax on this income|
|0 – $18,200||Nil|
|$18,201 – $37,000||19c for each $1 over $18,200|
|$37,001 – $90,000||$3,572 plus 32.5c for each $1 over $37,000|
|$90,001 – $180,000||$20,797 plus 37c for each $1 over $90,000|
|$180,001 and over||$54,097 plus 45c for each $1 over $180,000|
Note: In addition to the above, you will need to add 2% for the Medicare Levy.
Increase in the ATO’s Cents per Kilometre
From 1 July 2018, the ATO’s cents per KM increased from 66 cents to 68 cents per km.
The amount that can be claimed is calculated as: Total business km travelled x 68 cents.
This article is prepared by Definitiv. Contact Definitiv on 1300 125 307 for more information.