$450 super guarantee threshold removed for employees aged 18 and over
Before 1 July 2022, you only needed to pay super guarantee if you paid your worker $450 or more (before tax) in a month.
From 1 July 2022, you may need to contribute to your employee’s super regardless of how much they earn. The $450 per month threshold for super guarantee has been removed.
If your employee is under 18 years old, they’ll still need to work more than 30 hours in a week to be eligible for super. This criteria has not changed.
Superannuation guarantee increased to 10.5%
The super guarantee rate increased from 10% to 10.5% on 1 July 2022. You need to use the new rate to calculate super on payments you make to employees, even if some or all of the pay period is for work done before 1 July. The SG rate is legislated to increase to 12% by 2025.
Make sure you update your payroll and accounting systems so that you continue to pay the right amount of super for your employees.
New guidance on unpaid trust distributions to corporate beneficiaries comes into effect that may treat some unpaid distributions as loans and trigger tax consequences
An unpaid present entitlement (UPE) is an amount of trust income which the trustee of a trust appoints, but does not pay, to a private company beneficiary. A UPE according to Division 7A of the draft tax determination, even when not converted to a loan, can now amount to the provision of financial accommodation by the private company in favour of the trust, meaning it may be considered a loan. This is particularly relevant in cases where the company and the trust are part of the same family group.
The simplest way to avoid Division 7A deeming the UPE a loan, is by paying out the UPE.
Home loan guarantee scheme extended to 35,000 per year for first home buyers and 5,000 per year for single parents
The government announced that it is extending the home loan guarantee scheme to help more Australian’s get into the housing market.
The government is increasing its guarantees from 10,000 places a year to 35,000 places, as well as another 5,000 guarantees each year until June 30, 2025 to single parents to help them buy their first home.
Another 10,000 places will be guaranteed each year from October 1, 2022, to June 30, 2025, under a new Regional Home Guarantee to support eligible homebuyers, including non-first home buyers and permanent residents, to purchase or construct a new home in regional areas.
Australia’s minimum wage increased
Following the Fair Work Commission’s annual review of wages, the national minimum wage has increased by 5.2%, or $40 a week as of 1 July 2022. Award wages also increased by 4.6% which are subject to a minimum increase of $40 a week based on a 38-hour week for full-time employees on adult award classifications. This also applies to any awards that are calculated off adult award rates such as apprentices and juniors.
There is a delay in some awards receiving this increase, to allow for sectors who were hit hard by COVID to prepare. In the aviation, tourism and hospitality sectors, awards will increase from the first full pay period on or after 1 October 2022.
Age for down-sizer super contributions reduced to 60 years and older
Effective from 1 July 2022, eligible individuals aged 60 years or older can choose to make a down-sizer contribution into their superannuation of up to $300,000 per person ($600,000 per couple) from the proceeds of selling their home. This was part of the Treasury Laws Amendment Bill 2021. The government has announced it will support a further reduction of the down-sizer eligibility age to 55, though this is not yet law.
Value of voluntary super contributions that can be withdrawn under the First Home Saver Scheme increased to a total of $50,000
The First Home Super Saver Scheme (FHSSS) was introduced in 2017, allowing you to make voluntary before-tax contributions to your super to save for your first home. You can then apply to release voluntary contributions from your super to help you purchase your home. From July 1, 2022, the total amount allowed to be released from your super to contribute to your first home increased from $30,000 to $50,000. The amount you can contribute each year to count to your first home remains at $15,000.
Work-test repealed for those under 75 to make or receive non-concessional or salary sacrifice super contributions (the work test still applies to personal deductible contributions)
Before 1 July 2022, if you were 67 to 74 years old you could only make or receive voluntary contributions (both concessional and non-concessional) to your super if you met the work test. That is, you must work at least 40 hours over a 30-day period in the relevant financial year.
From 1 July 2022 this requirement was removed except for individuals wishing to claim a personal super contribution deduction. This means, if you are under 75 years old you can make or receive personal super contributions and salary sacrificed contributions (within your existing contribution cap limits) without meeting the work test.