parliament canberra

2024–25 Federal Budget Highlights

Budget 2024–25 key measures you must know

Described as a “responsible Budget that helps people under pressure today”, the Treasurer has forecast a second consecutive surplus of $9.3 billion.

The main priorities of the government, as reflected in the Budget, are helping with the cost of living, building more housing, investing in skills and education, strengthening Medicare and responsible economic management to help fight inflation.

The key tax measures announced in the Budget include extending the $20,000 instant asset write-off for eligible businesses by 12 months until 30 June 2025, introducing tax incentives for hydrogen production and critical minerals production, strengthening foreign resident CGT rules and penalising multinationals that seek to avoid paying Australian royalty withholding tax.

The Budget also includes various amendments to previously announced measures, as well as a number of income tax measures that have already been enacted prior to the Budget announcement, including:

These enacted measures have not been discussed in detail in our summary report:

Income tax

The tax, superannuation and social security highlights are set out below. The government anticipates that the tax measures put forward will collectively improve the Budget position by $3.1 billion over a 5-year period to 2027–28.

  • The instant asset write-off threshold of $20,000 for small businesses applying the simplified depreciation rules will be extended for 12 months until 30 June 2025
  • The foreign resident CGT regime will be strengthened for CGT events commencing on or after 1 July 2025
  • A critical minerals production tax incentive will be available from 2027–28 to 2040–41 to support downstream refining and processing of critical minerals
  • A hydrogen production tax incentive will be available from 2027–28 to 2040–41 to producers of renewable hydrogen
  • The minimum length requirements for content and the above-the-line cap of 20% for total qualifying production expenditure for the producer tax offset will be removed
  • A new penalty will be introduced from 1 July 2026 for taxpayers who are part of a group with more than $1 billion in annual global turnover that are found to have mischaracterised or undervalued royalty payments
  • The Labor government’s 2022–23 Budget measure to deny deductions for payments relating to intangibles held in low- or no-tax jurisdictions is being discontinued
  • The start date of a 2023–24 Budget measure to expand the scope of the Pt IVA general anti-avoidance rule will be deferred to income years commencing on or after assent of enabling legislation
  • Income tax exemptions for World Rugby and/or related entities for income derived in relation to the Rugby World Cup 2027 (men’s) and Rugby World Cup 2029 (women’s)
  • Deductible gift recipients list to be updated.

Superannuation

  • Superannuation will be paid on government-funded paid parental leave (PPL) for parents of babies born or adopted on or after 1 July 2025
  • The Fair Entitlements Guarantee Recovery Program will be recalibrated to pursue unpaid superannuation entitlements owed by employers in liquidation or bankruptcy from 1 July 2024
  • Prior to the Budget the draft of the $3 million super tax legislation was given Senate go-ahead and remains unchanged — it will include the taxing of unrealised gains and no indexation. Read more »

Tax administration

  • The ATO will be given a statutory discretion to not use a taxpayer’s refund to offset old tax debts on hold
  • Indexation of the Higher Education Loan Program (and other student loans) debt will be limited to the lower of either the Consumer Price Index or the Wage Price Index, effective from 1 June 2023
  • A pilot program of matching income and employment data of migrant workers will be conducted between the Department of Home Affairs and the ATO
  • A new ATO compliance taskforce will be established to recover tax revenue lost to fraud while existing compliance programs will be extended.

GST

  • Refunds of indirect tax (including GST, fuel and alcohol taxes) will be extended under the Indirect Tax Concession Scheme.

Small business depreciation — instant asset write-off threshold of $20,000 extended to 2024–25

The instant asset write-off threshold of $20,000 for small businesses applying the simplified depreciation rules will be extended for 12 months until 30 June 2025.

Small businesses (aggregated annual turnover less than $10 million) may choose to calculate capital allowances for depreciating assets under a simplified regime in Subdiv 328-D of ITAA 1997. Under these simplified depreciation rules, an immediate write-off applies for low-cost depreciating assets. The measure will apply a $20,000 threshold for the immediate write-off, applicable to eligible assets costing less than $20,000 that are first used or installed ready for use by 30 June 2025.

Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year thereafter. The provisions that prevent small businesses from re-entering the simplified depreciation regime for 5 years if they opt-out will also continue to be suspended until 30 June 2025.

The measure extends a 2023–24 Budget measure to increase the instant asset write-off threshold to $20,000 for the 2023–24 income year. A Bill containing amendments to increase the instant asset write-off threshold for 2023–24 is currently before Parliament. The Bill was amended by the Senate to increase the instant asset write-off threshold for 2023–24 to $30,000 and extend access to the instant asset write-off to entities that are not small business entities but would be if the aggregated turnover threshold were $50 million.

Tax administration

Statutory discretion for ATO to deal with tax refunds and debts on hold

The Commissioner of Taxation will be given the discretion to not use a taxpayer’s refund to offset old tax debts where that debt had been put on hold before 1 January 2017. The tax law will be amended to provide for this ATO discretion which will apply to individuals, small businesses and not-for-profits. The discretion will maintain the ATO’s current administrative approach to such debts.

Student loans indexation reform

Indexation of the Higher Education Loan Program (and other student loans) debt will be limited to the lower of either the Consumer Price Index or the Wage Price Index, effective from 1 June 2023, subject to the passage of legislation. The measure will apply retrospectively.

Data matching program for migrant workers’ income and employment

A pilot program matching income and employment data will be conducted between the Department of Home Affairs and the ATO to mitigate the exploitation of migrant workers and abuse of Australia’s labour market and migration system. This measure forms part of broader reforms to the migration system.

Strengthening ATO ability to combat fraud and extension of compliance programs

The ATO will be provided additional funding to continue various compliance programs. The current ATO Personal Income Tax Compliance Program will be extended for another year from 1 July 2027 to enable the ATO to continue its focus on emerging risks to the tax system. The Shadow Economy Compliance Program and the Tax Avoidance Taskforce will be extended for 2 years from 1 July 2026.

Funding will be provided to the ATO to improve its detection of tax and superannuation fraud, including to upgrade its information and communications technologies to be able to identify and block suspicious activity in real time. A new compliance task force will also be established to recover lost revenue and block attempts to obtain refunds fraudulently. Funding will also be provided to improve ATO’s management and governance of its counter-fraud activities.

The ATO will also be given additional time within which to notify a taxpayer if it intends to retain a business activity statement (BAS) refund for further investigation. The current required notification period of 14 days will be extended to 30 days, aligning it with time limits for non-BAS refunds. This measure will take effect from the start of the first financial year after assent of the enabling legislation.

2019-20 Budget measure on black economy will not proceed

The 2019–20 Budget measure “Black Economy — Strengthening the Australian Business Number system” will not proceed as integrity issues are being addressed through enhanced administrative processes implemented by the ATO.

GST

Refunds of indirect tax extended under Indirect Tax Concession Scheme

Refunds of indirect tax (including GST, fuel and alcohol taxes) will be extended under the Indirect Tax Concession Scheme (ITCS).

The Square Kilometre Array Observatory (SKAO) will have ITCS access upgraded for additional concessions to be claimed for the purchase of vehicles for personal use by SKAO officials or a member of their family. Additional concessions for commercial rent will also be formalised for existing ITCS packages for Bangladesh, Costa Rica, El Salvador and the Taipei Economic and Cultural Office. Construction and renovation concessions will be formalised for the existing ITCS package for the Netherlands. Concessions for both commercial rent and construction and renovation will be formalised for the existing ITCS package for Pacific Trade Invest.

Superannuation

Super to be paid on government-funded paid parental leave

Superannuation will be paid on government-funded paid parental leave (PPL) for parents of babies born or adopted on or after 1 July 2025. Eligible parents will receive an additional payment based on the superannuation guarantee (12% of their PPL payments), as a contribution to their superannuation fund. Payments will be made annually to individuals’ superannuation funds from 1 July 2026.

Recovery of unpaid super from liquidated or bankrupt employers

The Fair Entitlements Guarantee Recovery Program will be recalibrated to pursue unpaid superannuation entitlements owed by employers in liquidation or bankruptcy from 1 July 2024.

To discuss how these Budget measures impact you or your business, please contact your Allan Hall Advisor.

Full Budget papers are available at budget.gov.au and the Treasury ministers’ media releases are available at ministers.treasury.gov.au.

CONTACT ALLAN HALL BUSINESS ADVISORS

family paper chain

Parental Leave Changes — Effective 1 July 2023

Unpaid Parental Leave

From 1 July 2023, employees will have access to changed unpaid parental leave entitlements as part of the Federal government’s recent initiatives which aim to provide families with greater flexibility.

A summary of the recent changes can be found in the table below:

Parental Leave Changes — Effective 1 July 2023 1

Impact on Employers

It is important for you to be aware of these changes to be able to adjust your policies or employee handbook and to respond to new requests and extensions to unpaid parental leave accordingly.

Please note, that if an employee wishes to extend their original unpaid parental leave, they must give at least 4 weeks’ notice in writing, before the end date of their original leave period, and the request must include the new leave end date.

As an employer, you must respond within 21 days, either agreeing; agreeing to a variation after discussion with the employee; or refusing the request. Please be mindful however, that you can only refuse a request if you have discussed a variation to the extension period with the employee but haven’t been able to reach an agreement AND if your refusal is on reasonable business grounds.

As part of the new legislation, employees have the right to lodge a dispute regarding a request for extended leave with the Fair Work Commission if:

  • the employer refuses an employee’s request;
  • the employer doesn’t provide a written response to a request within 21 days; or
  • the employee and employer have been unsuccessful in trying to resolve the dispute at the workplace level.

We therefore highly recommend that you discuss the matter with one of our consultants at Allan Hall HR before refusing any request for an extension to unpaid parental leave.

Paid Parental Leave changes

Further changes have also been made from 1 July 2023 to the Government’s Paid Parental Leave (PPL) scheme, which provides eligible individuals with financial support for the birth or adoption of a child.

Under the previous PPL scheme, parents would need to apply separately (i.e. the primary caregiver could access up 18 weeks of financial support, and the partner or ‘secondary carer’ could access up to 2 weeks of support under what was referred to as ‘Dad and Partner Pay.’)

From 1 July, parents will be able to apply to this scheme together and may access up to 20 weeks of paid parental leave to use between them. The Government has indicated that the payment will continue to increase by 2 weeks each year until 1 July 2026 when it will reach 26 weeks.

Please note, it is up to the individual to apply for a PPL payment directly through Services Australia. You will not be able to apply for this benefit on the employee’s behalf.  When an employee applies, their eligibility is determined by Services Australia. Eligibility is not determined by the employer.

Allan Hall HR has a team of experienced consultants to help answer any questions you may have regarding the Unpaid and Paid Parental Leave changes and how they should be applied to your unique business and employee circumstances.

We encourage you to reach out to us for further guidance by calling 1300 675 393 or emailing [email protected].

CONTACT ALLAN HALL HUMAN RESOURCES

July

1 July Changes

What you need to know

There are legal, financial, and other changes your business will have to be across very soon. Not sure what they are or what to do? Don’t worry, we have you covered.

It’s been a big year for changes in areas like people management, pay and tax. Here’s a rundown of some key changes that will come into effect 1 July and what they mean for your business and your employees.

1. SUPER GUARANTEE INCREASES

If you haven’t already, then it’s time to get your payroll systems sorted as the superannuation guarantee increases to 11% from 1 July.

Also, make sure you’re across the gradual increases, which will see the super guarantee reach 12% by July 2025.

To work out how this will impact employees’ pay, have a look at whether their contract states their salary is inclusive of superannuation or not.

2. WAGES GO UP

Employees should also be aware that from 1 July, wage increases will come into effect following a ruling from the Fair Work Commission.

For employees who aren’t covered by an award, the minimum wage will go up from 1 July to $882.80 per week, or $23.23 per hour, and will apply from the first full pay period starting on or after 1 July 2023.

For employees covered by an award, minimum award wages will increase by 5.75%, also applying to the first full pay period starting on or after 1 July 2023.

3. FAIR WORK COMMISSION CHANGES

From 1 July 2023, the application fee will increase to $83.30. The fee applies to dismissal, general protections, bullying, and sexual harassment at work applications made under sections 365, 372, 394, 773, and 789FC of the Fair Work Act 2009.

There is no fee to make an application to deal with a sexual harassment dispute under section 527F of the Fair Work Act.

Also effective from 1 July, the high-income threshold in unfair dismissal cases will increase to $167,500 and the compensation limit will be $83,750 for dismissals occurring on or after 1 July 2023.

4. PAID PARENTAL LEAVE CHANGES

From 1 July, amendments to the Paid Parental Leave Scheme will come into effect.

Notably, the Dad and Partner Pay (DAPP) scheme, which currently provides up to two weeks of paid leave, will now be combined with the 18-week paid parental leave scheme. This means eligible parent couples or single parents can share their 20 weeks of leave – aimed at greater gender equity in parental caring responsibilities.

There are other changes, too, such as the whole 20 weeks of leave of instalments can be received flexibly in multiple blocks within 24 months of the child’s birth or adoption date, removing the previous requirement of 12 weeks in one continuous period.

Also, note that employees now have greater rights to request an additional 12 months of leave (24 in total) – and employers need to show reasonable business grounds on which to refuse.

5. CHILDCARE SUBSIDIES

For those who employ parents with young children, it’s worth noting that childcare rebates will change from 1 July. They should result in any employees with a family income of less than $530,000 getting a higher level of subsidy for the cost of childcare.

For example, families earning up to $80,000 will get an increased maximum Child Care Subsidy (CCS) amount, from 85% to 90%. If they earn over $80,000, they may get a subsidy starting from 90%, but it will go down by 1% for each $5,000 of income the family earns.

While these changes are applied automatically, it is worth being aware that they are coming.

6. DOMESTIC VIOLENCE LEAVE INTRODUCED

From 1 February, employers with 15 or more employees were required to provide their employees with 10 days of paid family and domestic violence leave (FDVL) per year. 

For smaller employers who employ less than 15 employees, this entitlement will operate from 1 August 2023.

Paid family and domestic violence leave is quite a sensitive topic, and there need to be procedures in place – on everything from how the HR or manager handles requests to the privacy issues around how it gets recorded on a pay slip.

7. PENSION AGE AND ELIGIBILITY INCREASES

For those businesses employing older Australians, it’s worth noting that from 1 July, the pension age will be raised to 67 for those born on or after 1 January 1957.

Not only that but asset and income eligibility tests will also be revamped, which means singles can earn $204 a fortnight and couples $360 a fortnight, before losing their full pension.

8. ENERGY BILL RELIEF ON ITS WAY

With soaring power bills contributing significantly to business operating costs, $650 in bill relief is on its way from July.

The total amount of bill relief will vary by state. To be eligible, your business must be on a separately metered business tariff with your electricity retailer – so if you run a business from home, you probably won’t qualify.

CONTACT ALLAN HALL BUSINESS ADVISORS

closed store

Annual Shutdown and Unpaid Leave changes

Understanding the revised regulations for Annual Leave and Unpaid Leave during temporary business shutdowns

Impact on employers and employees

Generally, when businesses temporarily shut down over Christmas/New Year, employers have been able to direct their employees to take annual leave or, where they have no annual leave entitlements available, employers have been able to direct their employees to take unpaid leave

As a result of changes to 78 Awards, from 1 May 2023, employers will no longer be permitted to direct their employees to take unpaid leave where they do not have a sufficient accrual of annual leave to cover the shutdown. 

The recent findings of the Fair Work Commission were, that making a direction to an employee to take unpaid leave was effectively a stand down, and the Fair Work Act 2009 only permitted employees to be stood down in limited circumstances, which did not include a temporary stoppage of operations such as an annual shutdown.   

Award Covered Employees 

Under the changes to the Awards listed in the Commission’s decision here, employers can still issue a direction to employees to take annual leave during a temporary shutdown if the direction is in writing, is reasonable and their employees have accrued sufficient annual leave entitlement. 

In assessing reasonableness, the following factors are relevant:   

  • the needs of the employee and the business   
  • any agreed arrangement with the employee   
  • custom and practice of the business   
  • timing of the direction or requirement to take leave   
  • whether the length of the period of notice given is reasonable. 

Each Award stipulates the period of notice which must be given to all employees of the shutdown (generally between 28 days and two months) unless a shorter period is agreed with the majority of employees, or for employees who are engaged after notice is given, as soon as reasonably practicable after they have been engaged. 

Employers are no longer permitted to direct employees to take unpaid leave where their annual leave entitlements have been exhausted. 

However, under the changes, employers can still: 

  • agree with an employee in writing that they take a period of unpaid leave; or 
  • come to an arrangement with the employee to take annual leave in advance resulting in a negative annual leave balance. 

But, if employees do not agree to the above, then they will be entitled to be paid wages during the shutdown period.  

Award and Agreement Free Employees 

For award and agreement-free employees, employers can still require them to take a period of annual leave if the requirement is reasonable. 

A requirement to take annual leave may be reasonable if, for example: 

  1. the employee has an excessive annual leave balance
  2. the business is being temporarily shut down for a period (such as between Christmas and New Year). 

Just like Award Covered Employees, Award/Agreement Free employees cannot be directed to take unpaid leave if they do not have sufficient accrued annual leave. 

Need Assistance?

If your business is planning a temporary shutdown of its operations, it is important that you are aware of your obligations under each applicable award for your employees and manage employee leave accordingly. Should you require assistance with notification requirements or reaching agreement with your employees regarding shutdown arrangements, please feel free to call us on 1300 675 393 or contact Alan Hall Human Resources here »

gavel

Recent IR changes requiring employer action

8 Industrial relations changes requiring actions by employers

There have been a number of recent significant changes in the area of industrial relations as a result of the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022, and the Fair Work Amendment (Paid Family and Domestic Violence Leave) Act 2022. 

Some of the main changes which will affect all businesses and require action include: 

1. Proactive Duty on Employers to eliminate discriminatory conduct in workplaces 

Employers, regardless of size or industry, now have a positive duty to take reasonable and proportionate measures to prevent, as far as possible, certain discriminatory conduct occurring in their workplaces, including: 

  • discrimination on the ground of a person’s sex; 
  • harassment (including sexual harassment); 
  • hostile workplace environments; and 
  • acts of victimisation that relate to complaints, proceedings or allegations of the above.  

The positive duty was a key recommendation of the Australian Human Rights Commission (AHRC)  landmark Respect@Work Report, led by Sex Discrimination Commissioner Kate Jenkins, published in March 2020, which found that there were still high levels of discrimination and underreporting of incidents in the workplace.  

The AHRC will have the right to initiate an inquiry into an employer’s compliance and enter into enforceable undertakings if they find an employer remains non-compliant.  

Businesses will have 12 months to understand their new obligations and implement any necessary changes before compliance and enforcement commences in December 2023. 

2. Additional protection against Sexual Harassment  

There has been an amendment to the Fair Work Act to protect workers, prospective workers and persons conducting or undertaking a business by prohibiting sexual harassment, effective from 6 March 2023. 

This amendment established a new dispute resolution process, allowing the Fair Work Commission (the Commission) to deal with disputes and if not resolved by conciliation or mediation, and the parties agree, the Commission can settle the dispute and make orders, including for compensation.  

Workers now have several avenues to pursue disputes in relation to sexual harassment: the Fair Work Commission, the Australian Human Rights Commission and Anti-Discrimination Board in their State or Territory. 

We recommend implementing an action plan to address points 1 and 2 above to ensure your business is meeting its new legal obligations. Our team at Allan Hall HR is across the legislation and can effectively and efficiently guide you in creating an action plan for your business. Please contact our team on 1300 675 393 or at [email protected] if you would like our assistance. 

3. Family and Domestic Violence Leave 

From 1 February 2023, all employees (including part-time and casuals) will be able to access 10 days’ paid family and domestic violence leave in each 12-month period.  

To access this paid leave, employees will need to show evidence that they require the leave to do something to deal with the impact of family and domestic violence and it’s not practical for them to do so during their work hours. 

There are also important implications for payroll to consider, including the recording of leave on payslips, attendance platforms, email and text trails.  

If you would like more information on this leave and its payroll implementation please refer to our Family and Domestic Violence Leave article or contact us on 1300 675 393 or at [email protected]

4. Limiting the use of fixed term contracts for employees 

There has been an amendment to the Fair Work Act to limit the use of Fixed term contracts beyond two years (including renewals) or two consecutive contracts – whichever is shorter. Employers will also be required to provide a Fixed Term Contract Information Statement to all employees entering a fixed term contract. This amendment takes effect as of 6 December 2023.  

Exceptions to this rule include; performing a discrete task for a fixed period, apprentices and trainees, temporarily replacing others on long leave e.g. workers compensation and where earnings are above the high income threshold.  

Where a fixed term contract is made in breach of the new provision, the contract will remain valid, but the employee will be considered a permanent employee. This means they will be entitled to: 

  • notice of termination and redundancy payments calculated from the start of the employment relationship, and 
  • access to unfair dismissal proceedings.  

Employers who breach the contract limitation or do not provide a Fixed Term Information Statement may be subject to civil penalties.  

If you have employees who will, as at 6 December 2023, have been on a fixed term contract of more than 2 years’ duration or more than one fixed term contract which would add up, to or allows for an extension to, more than 2 years, you will need to review the arrangements. Allan Hall HR can help in reviewing old contracts and the creation of new ones, contact us on 1300 675 393 or at [email protected].  

5. Prohibiting pay secrecy clauses 

Employees will have a right to disclose, or not disclose, their remuneration as of 7 December 2022.  

After a six-month transitional period, employers who continue to include pay secrecy terms in new written agreements and contracts of employment will have breached this prohibition and could be liable to a penalty.   

All written agreements with employees need to be reviewed to ensure there is no clause prohibiting them from disclosing their remuneration.  

6. Right to request flexible working arrangements  

The circumstances in which employees can request a flexible working arrangement have expanded. This provision extends to employees who are pregnant and situations where an employee, or member of their immediate family or household, experiences family and domestic violence. This amendment takes effect as of 6 June 2023.  

Employers are obligated to discuss any request for a flexible working arrangement with the employee. If the employer refuses the request, they will need to provide reasons in writing.  

The threshold of “reasonable business grounds” for refusal of any request has not changed, however, the legislation provides increased access to dispute resolution for employees through the Fair Work Commission if disputes about flexible working arrangements cannot be resolved at the workplace. 

Managers need to ensure that they discuss any request for flexible working arrangements with the employee and that any refusal is in writing and based on reasonable business grounds. If you would like additional guidance on when you are obligated to approve flexible work arrangements, contact the friendly team at Allan Hall HR for guidance on 1300 675 393 or at [email protected]

7. Unpaid Parental Leave 

Eligible employees will be entitled to an additional 12 months’ unpaid parental leave up to 24 months in total, unless their partner has already taken 12 months from 6 June 2023.  

When an eligible employee makes a request for an extension of unpaid parental leave, their employer has an obligation to discuss the request with them. If this request is refused, reasons must be provided to the employee in writing.  

If disputes cannot be solved at the workplace level, they can be escalated through conciliation or mediation.  

Any request for an extension of parental leave should be discussed with the employee. Any refusal must be in writing and based on reasonable business grounds. 

8. Enterprise Bargaining and Enterprise Agreements 

The Fair Work Act has been amended to include new enterprise agreement and bargaining laws which took effect from 7 December 2022. In summary: 

  • Changes have been introduced to simplify the bargaining process including reducing technical procedural steps prior to an agreement being approved. 
  • The “Better Off Overall Test” (BOOT) has been modified and the Commission will now undertake a ‘global assessment’ and take into account parties’ views to determine whether the agreement passes the BOOT. 
  • The process for terminating an enterprise agreement has changed and it is now more difficult for employers to unilaterally terminate an enterprise agreement after its nominal expiry date. 
  • Supported bargaining has been broadened and workers across multiple workplaces in a common sector will be able to bargain on a collective basis if they are ‘reasonably comparable’ in terms of the industry they operate within, their size, geographical location, business activities and operations. 
  • Certain workplace agreements (called ‘zombie agreements’) which were made before the Fair Work Act 2009 (Cth) fully commenced and that continue to operate (e.g. collective agreements, individual transitional employment agreements (or ITEAs), Australian Workplace Agreement (or AWAs), Division 2B State employment agreements, enterprise agreements made between 1 July and 31 December 2009) will automatically terminate on 7 December 2023 unless the employer applies for, and is granted, an extension. Employers who are covered by a ‘zombie agreement’ must also give each employee who is covered by their zombie agreement a written notice on or before 6 June 2023 advising the employee that: 
  • the employee is covered by a zombie agreement; and 
  • the zombie agreement will terminate on 7 December 2023 unless an extension request is made; and 
  • the sunsetting process commenced on 7 December 2022. 

Need assistance? Please contact the team at Allan Hall HR on 1300 675 393 or at [email protected] should you require assistance with actioning any of these IR changes to ensure your business is compliant.  

Xero STP Phase 2 leave transition

Xero STP Phase 2 rollout

Everything to know (and do) for the final stage of Xero’s STP Phase 2 rollout

By now, most business owners are probably familiar with Xero’s approach to getting payroll data ready for Single Touch Payroll Phase 2.

This will see businesses build on their existing STP reporting to share more information with the ATO and other government agencies each time employers process a pay run. And the good news is, Xero now arriving at stage three – the final stage of their transition to STP Phase 2.

Xero’s STP Phase 2 reporting deferral deadline is now 31 March 2023 meaning Xero Payroll users will have until the New Year to activate STP Phase 2. However, you can get your data ready today. In fact, it is recommended that you complete each stage sequentially as they are made available in Xero Payroll.

The three stages of transitioning to STP Phase 2 in Xero

Stage one – Delivered in August: The first part of this process is transitioning your existing employee profiles to be STP Phase 2 compliant. This stage also includes providing additional information when onboarding new employees to Xero Payroll.

Stage two – Delivered in September: You’ll need to identify and update certain pay items with the new earnings categories defined by the ATO for STP Phase 2 reporting.

Stage three – Rolling out from late October: This is the final stage in the STP Phase 2 transition which will break down paid leave into additional subcategories. We’ll support you with a guided experience in payroll so you can easily update existing paid leave types to meet the new ATO reporting requirements.

So you’re ahead of the deadline, it’s best to transition your payroll data as soon as possible. Head over to the STP 2 Portal in Xero Payroll to progress through each stage.

Stage three involves the introduction of new paid leave categories

STP Phase 2 introduces a set of new ATO reporting categories for use in your leave pay items. You will need to categorise any existing paid leave types you have set up in Xero Payroll. The categories available include:

Other paid leave (Type O)

  • Annual leave
  • Compassionate and bereavement leave
  • Family and domestic violence leave
  • Long service leave
  • Personal (sick/carer’s) leave
  • Rostered day off
  • Special paid leave
  • Study leave
  • Time off in lieu

Ancillary and defence leave (Type A)

  • Community service leave
  • Defence reserve leave
  • Jury duty leave

When these types of leave payments are correctly categorised in STP filing, the data can be more easily shared across government departments (like Services Australia). Learn more about the process of updating leave categories in Xero Payroll here:

Xero will be launching the leave pay item transition tool to help you with this final stage and has built a transition tool to assist you with easily categorising your existing leave pay items to meet STP Phase 2 reporting requirements. Xero has also been rolling out changes to Xero Payroll in preparation for STP Phase 2. As a result, it’s likely that some leave pay items may already have the correct reporting category assigned.

What Xero Users need to do now

Head to the STP 2 Portal in Xero Payroll and progress through each stage of the transition process to get your payroll data ready for Phase 2 reporting.

  • Stage one: Updating employee records to meet the new STP Phase 2 filing requirements.
  • Stage two: Updating income pay items to the new STP Phase 2 filing requirements.
  • Stage three: Categorising your existing paid leave types to the new filing requirements.

It’s important to mark each stage as complete in the STP 2 Portal before moving forward. This ensures your payroll data is accurate and could help reduce filing errors later in the financial year. Once you’ve completed all three stages, your business will be ready to switch to STP 2 later in the financial year.

Xero will be ready to report your updated payroll data to the ATO by mid-December 2022. While there is a deferral until 31 March 2022, we strongly recommend that you get your data ready for the transition as early as possible. If you’re unsure about updating your payroll data for STP Phase 2, contact our Bookkeeping team on 02 9981 2300.

CONTACT ALLAN HALL

Parliament House

Labor Government 2022-23 Federal Budget

Tax & Superannuation Overview

2022–23 Labor Federal Budget Highlights

The Federal Treasurer, Dr Jim Chalmers, handed down the Labor government’s first Federal Budget at 7:30 pm (AEDT) on 25 October 2022.

Despite an uncertain global economic environment, the Treasurer has lauded Australia’s low unemployment and strong export prices as reason for a 3.5% growth in the current financial year, slowing to 1.5% in 2023–24. The Budget projects a deficit of $36.9 billion, lower than the forecast earlier this year of $78 billion.

Described as a sensible Budget for the current conditions, it contains various cost of living relief measures including cheaper child care, expanding paid parental leave and encouraging downsizing to free up housing stock. Key tax measures are targeted at multinationals, particularly changes to the thin capitalisation rules, and changes to deduction rules for intangibles.

Importantly, no amendments have been proposed to the already legislated Stage-3 individual tax rate cuts. Additional funding for a range of tax administration and compliance programs have also been announced. Finally, the fate of a suite of announced but unenacted tax measures, including a few that have been around for at least 10 years, has been confirmed.

The full Budget papers are available at www.budget.gov.au and the Treasury ministers’ media releases are available at ministers.treasury.gov.au. The tax, superannuation and social security highlights are set out below.

To read our comprehensive Budget report outlining the changes to taxation and accounting, please click below:

Business

  • Electric vehicles under the luxury car tax threshold will be exempt from fringe benefits tax and import tariffs.
  • A number of Victorian and ACT-based business grants relating to the COVID-19 pandemic will be non-assessable non-exempt income for tax purposes.
  • Grants will be provided to small and medium-sized businesses to fund energy-efficient equipment upgrades.
  • The tax treatment for off-market share buy-backs undertaken by listed public companies will be aligned with the treatment of on-market share buy-backs.
  • The 2021–22 Budget measure to allow taxpayers to self-assess the effective life of intangible depreciating assets will not proceed.
  • Heavy Vehicle Road User Charge rate increased from 26.4 to 27.2 cents per litre of diesel fuel, effective from 29 September 2022.
  • Australia has signed a new tax treaty with Iceland.
  • Additional tariffs on goods imported from Russia and Belarus have been extended by a further 12 months, to 24 October 2023.
  • Ukraine goods are exempted from import duties for a period of 12 months from 4 July 2022.
  • Technical amendments to the taxation of financial arrangements (TOFA) rules proposed in the 2021–22 Budget will be deferred.
  • Amendments to simplify the taxation of financial arrangements (TOFA) rules proposed in the 2016–17 Budget will not proceed.
  • The proposed measure from the 2018–19 Budget to impose a limit of $10,000 for cash payments will not proceed.
  • Proposed changes in the 2016–17 Budget to amend the taxation of asset-backed financing arrangements will not proceed.
  • The new tax and regulatory regime for limited partnership collective investment vehicles proposed in the 2016–17 Budget will not proceed.
  • The Pacific Australia Labour Mobility (PALM) scheme will be expanded and enhanced.

FBT and tariff exemptions for electric vehicles

Electric vehicles under the luxury car tax threshold ($84,916 for 2022–23) will be exempt from fringe benefits tax and import tariffs. To qualify for the exemption, the electric vehicle must not have been held or used prior to 1 July 2022. Legislation introducing the FBT exemption is before the Senate.

The FBT exemption ultimately provides an opportunity for individuals to purchase an electric vehicle under a salary sacrifice novated lease arrangement. Without the FBT exemption, any benefit of this type of arrangement can be negligible. This is especially the case when an employee’s business use percentage is very low or nil. A salary sacrifice arrangement effectively a saving for the user of an electric vehicle, as the payment of the vehicle will reduce their income tax. Along with the FBT savings, consumers of electric vehicle will also benefit from the removal of a 5% import tariff.

Despite the FBT exemption, an employer will still be required to report employees’ reportable car fringe benefits in the employees’ reportable fringe benefits amount. This reportable amount is part of the payment summary reporting requirements and is used to calculate various tax rebates and thresholds.

More business grants to non-assessable non-exempt income status

State-based business grants handed out during the COVID-19 pandemic are assessable income to the recipient unless the government places that grant in a special exclusion category. The government has announced the following Victorian and ACT business grants to be non-assessable non-exempt income for tax purposes:

This announcement is in addition to several other state-based business grants that have been give non-assessable non-exempt status since the beginning of the COVID-19 pandemic.

Energy efficiency grants for SMEs

Grants will be provided to small and medium-sized businesses to fund energy-efficient equipment upgrades.

The grants will be available to support studies, planning, equipment and facility upgrade projects that improve energy efficiency, reduce emissions or improve management of power demand. The government will provide $62.6 million over 3 years from 2022–23 for this measure.

Fuel tax credits — heavy vehicle road user charge increased

The Heavy Vehicle Road User Charge rate has been increased from 26.4 cents per litre to 27.2 cents per litre of diesel fuel, effective from 29 September 2022.

The previous rate of 26.4 cents per litre was announced in the 2021–22 Budget and commenced on 1 July 2021. The increased rate will reduce expenditure on the Fuel Tax Credit from the 2022–23 income year.

Individuals

  • The amount pensioners can earn in 2022–23 will increase by $4,000 before their pension is reduced, supporting pensioners who want to work or work more hours to do so without losing their pension.
  • To incentivise pensioners to downsize their homes, the assets test exemption for principal home sale proceeds will be extended and the income test changed.
  • The income threshold for the Commonwealth Seniors Health Card will be increased from $61,284 to $90,000 for singles and from $98,054 to $144,000 (combined) for couples.
  • The Paid Parental Leave Scheme will be amended so that either parent is able to claim the payment from 1 July 2023. The scheme will also be expanded by 2 additional weeks a year from 1 July 2024 until it reaches 26 weeks from 1 July 2026.
  • The maximum Child Care Subsidy (CCS) rate and the CCS rate for all families earning less than $530,000 in household income will be increased.
  • The current higher Child Care Subsidy (CCS) rates for families with multiple children aged 5 or under in child care will be maintained.
  • Legislation will be introduced to clarify that digital currency (or cryptocurrencies) will not be treated as foreign currency for income tax purposes.

Superannuation

  • Eligibility to make a downsizer contribution to superannuation will be expanded by reducing the minimum age from 60 to 55 years.
  • The 2021–22 Budget measure that proposed relaxing residency requirements for SMSFs and small APRA-regulated funds (SAFs) from 1 July 2022, has been deferred.
  • The 2018–19 Budget measure that proposed changing the annual audit requirement for certain self-managed superannuation funds (SMSFs) will not proceed.
  • A requirement for retirement income product providers to report standardised metrics in product disclosure statements, originally announced in the 2018–19 Budget, will not proceed.

Minimum age to make downsizer super contributions reduced

Eligibility to make a downsizer contribution to superannuation will be expanded by reducing the minimum age from 60 to 55 years.

The downsizer contribution allows an individual to make a one-off post-tax contribution to their superannuation of up to $300,000 per person from the proceeds of selling their home.

Both members of a couple can contribute and the contributions do not count towards non-concessional contribution caps.

The measure will take effect from the start of the first quarter after Royal Assent of the enabling legislation.

Proposed changes to SMSF residency requirements — deferred

The 2021–22 Budget measure that proposed relaxing residency requirements for SMSFs and small APRA-regulated funds (SAFs) from 1 July 2022, has been deferred.

The proposed measure relaxes the residency requirements for SMSFs by extending the central control and management test safe harbour from two to five years for SMSFs. In addition, the active member test will also be removed for both SMSFs and SAFs.

The change will allow members to continue to contribute to their superannuation fund whilst temporarily overseas, ensuring parity with members of large APRA-regulated funds.

This measure will now take effect on or after the date of Royal Assent of the enabling legislation.

Income threshold increased for Commonwealth Seniors Health Card

The income threshold for the Commonwealth Seniors Health Card will be increased from $61,284 to $90,000 for singles and from $98,054 to $144,000 (combined) for couples.

The government will also freeze social security deeming rates at their current levels for a further 2 years until 30 June 2024, to support older Australians who rely on income from deemed financial investments, as well as the pension, to deal with the rising cost of living.

This measure delivers on the Labor government’s election commitments as published in the Plan for a Better Future.

Need help?

If you would like assistance to interpret these changes and how they may affect your individual or business circumstances, please contact your Allan Hall Advisor on 02 9981 2300.

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outside the building

Closing for a well-deserved end of year break?

It’s time to let your clients and employees know

Act now to ensure your client expectations and employee legislative requirements are met.

Informing Clients of Business Shutdowns

It is common for a workplace to shut down its operations over the Christmas-New Year period because of a reduction in business activity or because the majority of employees request to take annual leave.

It’s up to businesses to determine closure dates and ensure these are clearly communicated to clients as early as possible, so that reasonable expectations are set and deadlines are met without creating any unnecessary worry. Recommended communication includes separate emails to clients, newsletter footers, invoice footers, notes on email signatures or any combination of the above.

To assist with planning your shutdown period, the NSW gazetted public holidays for the upcoming holiday season are:

  • Christmas Day: Sunday 25 December 2022
  • Boxing Day: Monday 26 December 2022
  • Additional Public Holiday for Christmas Day: Tuesday 27 December 2022
  • New Year’s Day: Sunday 1 January 2023
  • Additional Public Holiday for New Year’s Day: Monday 2 January 2023
  • Australia Day: Thursday 26 January 2023

Get ahead of the game. Download our Business Shutdown Client Email template to send to your clients.

Employee Notifications

Employers planning to close over the Christmas-New Year period need to also correctly inform employees from now. Employers are obligated to formally confirm business closure dates and notify staff in accordance with award requirements.

Most awards will contain terms which allow employers to shut down the business for a period and send employees on designated annual leave. This is usually subject to an employer providing at least 4 weeks’ notice of the intention to do so, however certain awards may require a greater notice period.

It’s never too early to start planning. Download our Business Shutdown Employee Notice template.

Employee Leave Considerations

Annual Leave Requests

With the Christmas and Summer Holiday period fast approaching, you may also notice an increased number of annual leave requests waiting for your approval. For those businesses that shut down over this period, approving annual leave is usually a joyous task. However, for smaller businesses continuing to trade during this period, it can be a difficult juggling act to ensure you have enough employees on board to meet your customers’ needs while also ensuring employees receive a well-deserved break.

When reviewing annual leave applications, it is important to remember that you cannot unreasonably refuse to authorise an employee’s request to take annual leave. If you need assistance with understanding the rules surrounding ‘reasonableness,’ please do not hesitate to make contact with our HR team.

Can employees refuse to work on Public Holidays?

Employers can request that employees work on a public holiday if the request is reasonable. Likewise, an employee can refuse to work on a public holiday if the employer’s request is not reasonable. In determining whether the employer’s request is reasonable, under the Fair Work Act a broad range of factors are taken into account. These include:

  • The nature of the employer’s workplace and the nature of the employee’s work
  • The employee’s personal circumstances
  • Whether the employee could reasonably expect the employer might request work on the public holiday
  • Whether the employee is entitled to receive overtime or other penalty payments that reflects the expectation to work public holidays
  • The type of employment of the employee (eg whether full-time, part-time, casual or shift work)
  • The amount of notice in advance of the public holiday given by the employer to the employee
  • The amount of notice given by the employee when refusing a request to work on a public holiday

Unsure of what applies or what steps to take? Don’t guess – seek advice.

Our team at Allan Hall Human Resource Services have years of first-hand experience to guide you and your business to a safe, enjoyable, and carefree festive season.

If you require advice on the conditions relating to your Employer rights or obligations, please get in touch with our highly experienced HR team on (02) 8978 3752 or simply contact us below.   

Safety Work Principles COVID-19

Pandemic Leave Disaster Payments extension

Pandemic Leave Disaster Payments will be extended indefinitely

The Prime Minister has confirmed that pandemic leave payments will be extended indefinitely following this week’s National Cabinet meeting.

That’s the payment to COVID-struck workers who don’t have access to sick leave and are forced to stay home under mandatory isolation periods.

The scheme was to be turned off at the end of September 2022, despite the 5-day isolation requirement remaining in place. Sick people, “whether from COVID or from other health issues”, should stay home — and there’s a responsibility for the government to cover them financially for the appropriate period which is designated,” the Prime Minister said.

Federal and states/territories are splitting the bill. At the next meeting, the National Cabinet will look at shortening the isolation period, with the Prime Minister noting other nations are “gradually moving towards COVID being treated like other health issues.”

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