Navigate the rest of this financial year with ease

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Navigate the rest of this financial year with ease

Have you felt a little lost in first few months of this financial year? Our knowledgeable team of advisers are here to help you navigate the changes to minimum wage and super guarantee contributions.

Increase to the Superannuation Guarantee Contribution Rate

What’s changed

Effective 1 July 2021 the following increase has been implemented:

  • The compulsory super guarantee contribution rate (i.e. employer contribution rate) has increased from 9.5% to 10%.
    • Each year on 1 July this will increase a further 0.5% until it reaches 12% in July 2025.

What this means for you as an employer

It’s important to review the wording of your employment contracts. The employment contract could be worded in two ways, as salary package/hourly rate plus superannuation, or as a fixed remuneration package (inclusive of super).

Salary package/hourly rate plus super:

As the super guarantee contribution rate has increased from 9.5% to 10%, you are now liable to pay the additional 0.5% super contribution. If your total payroll expenses are $1,000,000, this equates to a $50,000 increase in expenses for the 2022 financial year. Remember, the 0.5% increase will continue each year on 1 July until the super guarantee rate reaches 12%.

Fixed remuneration package (including super):

Your employees total remuneration package will not change, but rather 0.5% of their gross pay will be redirected to their super contributions. While your total business costs will not change, you should consider how employees will react to a reduction in their take home pay.

If your employees’ pay templates have been set up correctly then your payroll software should calculate this automatically. However, when processing your first pay run you should double check that it reflects the appropriate changes.

What this means as an individual

As an employee, it’s also important to review the wording of your employment contract. If your contract is worded as salary plus super, your take home pay won’t change and an extra 0.5% will be contributed to your super fund.

If your employment contract specifies your total remuneration package, you can expect a 0.5% decrease in your gross wages. It might be time to review your budget, or it could be a good opportunity to discuss your remuneration package with your employer. Keep in mind the 0.5% increase in super will happen year on year until July 2025.

Looking for a new job? Make sure you know the difference between the salary package types and try to negotiate a contract that is salary plus super.

How MBA can help

If you’re a business owner and you’re unsure about the wording of your employment contracts, if you don’t have employment contracts in place, or if you would like to update your employment contracts, please reach out to us for assistance.

If you want help to double check that your employee pay templates have been set up correctly in Xero, Quickbooks, or MYOB or your other accounting software, just let us know and we can take a look to ensure that things run smoothly for your next pay run.

We can also assist with cash flow projections for your business to account for the 0.5% increase this year, and discuss the implications of this increase each year until July 2025.

 

Increase to the Minimum Wage

What’s changed

The Fair Work Commission’s annual wage review has resulted in a 2.5% increase to the national minimum wage and modern award minimum wages.

  • Effective 1 July 2021 the national minimum wage has increased to $20.33 per hour, or $772.60 per week.
  • For casual employees the national minimum wage has increased to $25.41 per hour, which includes their 25% casual loading.
  • The 2.5% increase for most modern award minimum wages take effect from 1 July 2021, however some modern award increases will not take effect until 1 September 2021 or 1 November 2021.

What this means for you as an employer

You should review your employee wages to ensure that all wages are in line with the updated standards.

If your industry is covered under a modern award you should review the updated minimum wage for that award, and the date it takes effect.

Modern award details can be found using the following link:

https://www.fairwork.gov.au/awards-and-agreements/awards/find-my-award/

What this means as an individual

As an employee, make sure you know your rights. If you believe you are being paid lower than the minimum wage relevant to your industry or employment type then you should discuss this with your employer.

How MBA can help

If you’re not sure what the applicable award for your industry is please let us know and we can help you find the appropriate minimum wage requirements.

We can also assist with updating your employee pay templates in Xero, Quickbooks, MYOB or your other accounting software to adjust the hourly pay rates.

If you would like help with cash flow projections for your business to account for the increase in minimum wages please let us know.

All information provided here is general in nature only, in preparing it we did not take account of your individual and financial situation or particular needs.