Important Updates for 2023 Financial Year
Coming into the 2023 financial year, there are some important changes that take effect 1 July 2022. Businesses with employees and contractors need to be aware of these changes and make the necessary updates to their systems to ensure they fulfill their obligations.
Super Guarantee Rate Increase
The Super Guarantee Rate will increase from 10% to 10.5% on 1 July 2022. You will need to use the new rate to calculate super on payments you make to employees on or after 1 July 2022, even if some or all of the pay period is for work done before 1 July 2022.
$450 Eligibility Threshold Removed
From 1 July 2022, employees can be eligible for super guarantee (SG), regardless of how much they earn. This is due to the $450 per month eligibility threshold being removed, and may result in you paying super guarantee for an employee for the first time. If this occurs you will need to ensure that you have your employees' up to date superannuation details on file, and provide a Standard Choice Form if necessary.
Super for Contractors
A reminder that if you pay contractors mainly for their labour, they are considered employees for superannuation guarantee (SG) purposes, and you may need to pay super to a fund for them.
It doesn't matter if the contractor has an Australian business number (ABN).
Make super contributions for contractors if you pay them:
- under a verbal or written contract that is mainly for their labour (more than half the dollar value of the contract is for their labour)
- for their personal labour and skills (payment isn't dependent on achieving a specified result)
- to perform the contract work (work cannot be delegated to someone else).
The removal of the $450 eligibility threshold also applies to contractors, which means that if you pay a contractor mainly for labour, you will need to pay super regardless of how much you pay them.
Minimum Wage Increase
On 15 June 2022 the Fair Work Commission announced a 5.2% ($40 per week) increase to the national minimum wage.
Additionally, minimum wages in modern awards will increase by 4.6% subject to a minimum increase for adult award classifications of $40 per week. This means that the modern award minimum wage rates will increase by 4.6% for wage rates above $869.60 per week, or by $40 per week for wage rates below $869.60.
The increase will operate from 1 July 2022 in most modern awards. However, there are 10 modern awards in the aviation, tourism and hospitality sectors that will receive the increase from 1 October 2022.
Employers should check the updated wage rates in the applicable modern award, including when it will become effective.
The increase will also apply to:
- junior employees
- employees to whom training arrangements apply
- employees with a disability.
Employers should check if there are any additional costs to any piece rates or allowances that use the base rate of pay in the modern award for calculation.
For those employers utilising the annualised wage provisions that exist in some modern awards, now would be an appropriate time to review whether the annual wage being paid still satisfies the requirements of the award, or whether your employees need to be notified in writing of any change to the number of overtime hours that can be worked by an employee in a pay period.
If you require advice in any of these areas, Integrity Wealth can introduce you to HR specialists to assist.