All Providers: Upcoming Legislative Changes: Superannuation Increase, Tax Cuts, and Minimum Award Rate Adjustments

From 1 July 2024, several significant changes will take effect, impacting businesses across Australia. These include an increase in the Superannuation Guarantee (SG) rate from 11% to 11.5%, new tax cuts reducing PAYG (Pay As You Go) withholding amounts, and a general increase in minimum award wages.

These changes are crucial to be across, as they directly affect payroll operations, employee net wages, and superannuation contributions, necessitating updates to payroll systems and financial planning.

The increase in the SG rate requires businesses to contribute 11.5% of an employee’s ordinary time earnings to their superannuation. This means adjusting payroll systems and budget allocations.

The Tax Cuts will reduce PAYG withholding, increasing employees’ net take-home pay. Employers must review their payroll systems and confirm that the updates will take place from 01 July 2024. If payroll is done manually or if the system will not update automatically, employers must update their payroll systems to reflect these new withholding rates to ensure compliance and accurate wage payments.

For the Minimum Wage Increase, although the direct impact on NDIS, Child Safety, and Aged Care providers might be minimal, it is essential to ensure compliance with the new rates where applicable. Providers should review their payroll systems to ensure all employees are being paid according to the latest award rates.

To ensure compliance with the upcoming changes effective from 1 July 2024, businesses should review all resources linked to in this update and assess the applicability of the changes to their organisation and employees.

This includes:

• Identifying employees affected by the superannuation guarantee rate increase and tax cuts, to ensure compliance with the new minimum rates where applicable. Remember, if your employees are paid a base wage plus super, their base wage should remain unchanged, but super contributions will increase. However, if you pay your employees a total package, you should review the terms of their employment contracts because in these instances, sometimes the base wage will reduce to accommodate the increased super contribution. For example, if an employee’s total package is $85,000 and the super rate increases from 11% to 11.5%, the super contribution increases from $8,423.42 to $8,766.82, potentially reducing the base salary from $76,576.58 to $76,233.18 to maintain the total package amount.
• Adjusting financial forecasts to accommodate increased superannuation contributions and updating payroll systems to reflect the new SG rate and PAYG withholding rates. Communicate these changes clearly to employees and clients, explaining any potential impacts on wages, pricing, or services.
• Reviewing and revising employment contract templates and onboarding documents to reflect new rates if applicable, ensuring all current documents, contracts, and future advertisements accurately show the updated hourly rates and wages.

While the SCHADS Award and Aged Care Award typically have rates above the minimum wage, it is still important to review and ensure compliance with the new award rates.

Additionally, from 1 July 2024, employers must provide the new Fair Work Information Statement or a link to it to all new employees to ensure they are informed of their rights and obligations under the updated regulations.

The DO Checklist included with this update provides step-by-step guidance to help providers implement these changes.