What's New for the 2022 Financial Year?
As we head towards the finish line for the 2021 financial year, it is a good time to consider the new measures coming on from 1st July 2021 and how they may affect many businesses. Early consideration provides a business owner to consider any changes or updates they need to engage in prior to 30th June 2021.
We have provided below a summary of the key changes effective from 1st July 2021:
Single Touch Payroll Reporting Concessions – Micro Employers. From 1st July 2021 the eligibility criteria for STP quarterly reporting concessions for Micro employers will change and will only be available to micro employers who:
be a micro employer on the day you apply
lodge your activity statements electronically through a registered tax or BAS agent
have a non-computerised payroll. This could include running your payroll manually and keeping records on a spreadsheet or paper
all amounts owing to us are either not yet due or subject to a payment plan
all lodgement obligations are either not yet due or subject to a deferral
for applications for a period commencing after 1 July 2021, you must also meet the guidelines for exceptional circumstances.
Single Touch Payroll Reporting Concessions – Closely held Payees. From 1 July 2021, employers must report their closely held payees through STP. They can choose to report these payees each pay day, monthly or quarterly.
STP Phase 2- The ATO is planning on rolling out Phase 2 of the STP system after the successful implementation of the first release. Phase 2 is intended to make it easier for employers to report specific payment details made to employees across all income streams and supports the administration of the social security system. The mandatory start date for STP Phase 2 will be 1st January 2022 extended from 1st July 2021.
Superannuation Guarantee – the current rate of Superannuation guarantee of 9.5% is set to increase on 1st July 2021 to 10%. It will be imperative that all employers update their payroll records for all pay runs falling due after 1st July 2021 to ensure they are including the rate increase. For those using an electronic payroll system this should be included in the updates but crucial to confirm to avoid additional penalties and interest.
It will also be important for employees to consider the effect the increase will have on maintaining their Concessional Superannuation limits particularly for those with additional salary sacrifice arrangement.
(Please note that the Federal Government is yet to officially commit to this increase with Mr Frydenberg saying in recent months that a decision will be made in the May 2021 budget.)
Superannuation Accounts will follow employees - From 1 July, 2021 changes will see workers automatically keep their super fund when they change jobs, ‘stapling’ the super account to you.
Under the stapling charges, employers will be required to undertake the following steps when hiring a new employee:
An employer must find out from the Australian Taxation Office (ATO) if a new employee has an existing super fund. Employers will be required to make payments to that account if the employee does not notify them otherwise.
Alternatively, a new employee can notify their employer of their preferred fund (using the Standard Choice Form).
If the new employee doesn’t have an account, and does not let their new employer know which fund they have chosen, only then will the employer be allowed to create, on the new employee’s behalf, an account with its nominated default superannuation fund.
Increase in Superannuation Caps from 1st July 2021 – With the announcement of the AWOTE figure in the December 2020 quarter, the concessional contribution cap is set to increase from $25,000 p.a. to $27,500 p.a. from 1st July 2021.
This is an important increase for business owners looking to maximise their deductible super contributions.It is also relevant for employees with Salary sacrifice arrangements.
Temporary Full expensing of depreciating assets continues – As part of the 2020 Federal budget handed down in October 2020, the immediate write off provisions for depreciating assets purchased by small to medium business entities will continue until 30th June 2022.
Additionally the balance of all small business pools will be immediately deductible where they meet eligibility provisions until 30th June 2022.
FBT: Widening of Exemptions and Concessions
Car Parking Exemption – Employers with an aggregated turnover of up to $50 million will be eligible for the car parking exemption from 1 April 2021
Work Related items – Employers with an aggregated turnover of up to $50 Million will be eligible for the work related items exemption on multiple items from 1 April 2021
Company Loss Carry back - Eligible corporate entities with less than $5 billion turnover in a relevant loss year can carry back losses made in the 2019–20, 2020–21 and 2021–22 income years to a prior year's income tax liability in the 2018–19, 2019–20 and 2020–21 income years.
The amount of the tax offset is limited by the corporate entity’s income tax liabilities in the relevant gain years and its franking account balance at the end of the year in which the entity files its tax return claiming the loss carry back tax offset (the 2020–21 or 2021–22 income year).
The law commences on 1 January 2021. If eligible, corporate entities can claim the tax offset in their tax returns for the 2020–21 and 2021–22 income years.
In preparation for the start of the 2022 financial year, if you would like to explore further how the above measures may affect your business, please contact our office and talk to one of our experienced accountants.