28 June 2019

Tax changes for the 2020 financial year!

With a new financial year comes new requirements in relation to legislation and reporting. Here are the key changes to be aware of:

Single Touch Payroll (STP)
Single Touch Payroll (STP) is a new way of reporting tax and super information to the ATO. While this was introduced from 1 July 2018 for any employers of 20 or more people, STP has now been extended to include all employers.

If you have 19 or less employees, you will need to report through STP any time before 30 September 2019 – this is a gradual transition, and not all employers will start reporting at the same time.

Single Touch Payroll aligns your reporting obligations to your payroll processes, meaning that each time you process a pay run, your software will report the following to the ATO in real time:

  • Salaries and wages amounts
  • Allowances
  • Deductions (for example, workplace giving)
  • PAYG withholding
  • Superannuation information

While you will no longer be required to provide payment summaries to your employees for any payments reported through STP, it will be prudent that the information being lodged with your periodic payroll be correct, as this will be what the ATO will report to your employees to allow them to complete their own tax returns.  You will be required to make a finalisation declaration that declares you have provided all of the required information through STP.

There has been some misconception that the payment of PAYG withholding and superannuation guarantee obligations will be made at the same time as processing the payroll and paying the employees.  Please rest assured that this is not the case and you will continue to pay your PAYG withholding and superannuation obligations at the same time intervals that you currently do.

The good news is that all of the main software providers (Xero, MYOB, Reckon etc) have developed enhancements to their existing software, allowing you to report the STP information to the ATO at the time of completing your payroll, in the same way you currently do.  If you are required to report under STP and are using a manual payment system or software that will not report STP, you will be required to transition to a new payroll software that is compatible with STP reporting.

While all of this may sound daunting, please rest assured that we are ready and able to assist you with the transition to Single Touch Payroll.

Minimum wage increase by 3%
For employees whose pay rates are derived from the national minimum wage or a modern award, a wage increase of 3% will apply. The minimum wage will be increased around $21.60 a week, which will take the weekly minimum wage from $719.20 to $740.80.

Instant asset write-off to new asset purchases increased to $30,000
Effective from 2 April 2019, the asset write-off threshold increased from $25,000 to $30,000, which applies on a per asset basis. This had several change throughout the year:

  • 1 July 2018 – 28 January 2019: less than $20,000
  • 29 January 2019 – 2 April 2019: less than $25,000
  • 2 April 2019 – 30 June 2019: less than $30,000
    Note these amounts exclude GST

From 2 April 2019, this write-off was available to medium sized business as well (those with annual turnover of $10 million to $50 million).

Queensland Payroll Tax
The threshold to pay payroll tax has increased from $1.1m to $1.3m, applicable to all Queensland businesses, and the rate for businesses with a payroll above $6.5m will increase from 4.75% to 4.95%.

The rate for regional businesses with payroll up to $6.5m will decrease by 1% to 3.75%, and businesses over $6.5m to 3.95%. This applies to businesses with an address and employees who reside in Cairns, Central Queensland, Darling Downs-Maranoa, Mackay-Isaac-Whitsunday, Queensland-Outback, Townsville and Wide Bay.

For businesses hiring new employees, there is a rebate available of up to $20,000 on payroll tax. This is applied as a 100% rebate on the payroll tax relative to net growth in employees.

Queensland Land Tax
From 30 June 2019, land tax rates for companies and trusts with combined landholdings of $5 million or more will increase from:

  • 2% to 2.25% for each dollar above $5 million; and
  • 2.5% to 2.75% for each dollar above $10 million.

This increase follows the introduction of the new higher rate of land tax last year of 2.5% for landholdings over $10 million.

Farm Household Allowance (FHA) Changes
From 1 July 2019, proceeds from Forced Livestock Sales will be excluded from the Farm Household Allowance income test when that income is invested in a farm management deposit.

Seasonal Worker Program
Commencing 1 July 2019, a 12 month pilot program has been established to improve small farmers’ access to workers through the existing Seasonal Worker Program.

This program is aimed at simplifying requirements to make it easier and quicker for approved employers to recruit and move seasonal workers between smaller farms.

Superannuation
As you may already be aware, there are some substantial changes to your super commencing 1 July 2019, such as:

  • Superannuation funds will now be unable to charge fees of more than 3% p.a. for account balances below $6,000;
  • If your account balance is less than $6,000 or hasn’t been accessed for 16 months, then:
    • your superannuation account may be deemed ‘inactive’ and transferred to the ATO, who will then attempt contact you; and
    • you will need to ‘opt in’ to any insurance coverage (death, total and permanent disability) provided through your superannuation fund, or you will lose the insurance cover.

Most superannuation funds have sent correspondence to members regarding their inactive superannuation accounts, however if you are concerned about these changes, we recommend you contact your superannuation fund.

Increase to the age pension
Did you know the qualifying age for the age pension increases by six months every two years? From 1 July, the new qualifying age is 66. So, if you are born between 1 January 1954 and 30 June 1955, you can now claim the age pension once you turn 66.