As the new financial year begins, employers need to ensure their employees’ pay and superannuation contributions are processed correctly and on time, especially with several changes and rate adjustments taking effect from 1 July 2024. Here are some key considerations to keep in mind during this busy time of year.

Payroll

Single Touch Payroll (STP) Annual Reporting: Finalise STP annual reporting by selecting the final event indicator to “true” for all employees by 14 July 2024.

Tax Variations: Check and delete any tax variations ceasing as of 30 June 2024. Enter any new tax variations that apply from 1 July 2024.

Termination Payments: Revise termination worksheets for redundancies to reflect new tax-free limits and the employment termination payment (ETP) cap increase. Note that if an employee is terminated by 30 June but paid on or after 1 July, the new rates and thresholds apply.

Income Year Accuracy: Ensure wages are shown in the correct income year. Payments received on or after 1 July 2024 should be recorded in the 2024–25 income year.

Pay Rate & Salary Sacrifice Reviews: Review changes to pay rates or salary sacrifice arrangements, as award rate increases usually apply to the first full pay from 1 July.

Additional Tax Withholding: If 2024–25 results in 53 weekly pays or 27 fortnightly pays, employees can elect to have additional tax withheld. This may also affect the amount of employer and salary sacrifice contributions to super.

 

Superannuation

Concessional Contribution Limit: The superannuation concessional limit increases from $27,500 to $30,000 for 2024–25. This is the maximum amount that funds can receive for an individual, taxed at 15% (or 30% for high-income earners).

Super Contribution Rate: The super contribution rate for 2024–25 increases to 11.5%.

Employee Awareness: Employees often aim to maximise their super contributions and may expect employers to manage this process. However, it’s ultimately the employees’ responsibility.

Discrepancies in Reporting: Differences between what’s shown on payslips and income statements versus what’s counted in a financial year towards the limit can occur because payslips and income statements show amounts accrued, not necessarily what was paid to their super fund in that income year.

Payment Timing: Many employers make contributions monthly after month-end, meaning June contributions might not be received by the fund until July.

Clearing Houses: Contributions are only considered made when the clearing house passes the amounts to the super funds, which can take up to 10 working days.

Fund Cut-Offs: At the end of the income year, funds may have cut-off dates for recognising contributions before 30 June. Contributions processed by 30 June may not be allocated and reported until the new income year.

Minimising Confusion: To minimise confusion, ensure your employees understand:

• It’s their responsibility to manage their own concessional limit.
• Payslips and income statements show accrued liabilities, not necessarily what has been paid in the income year.
• Your timeframe for making contributions to funds, considering clearing house processing time.
• Some funds may not recognise amounts received late in June until the new income year, which varies by fund.
• By keeping these considerations in mind and clearly communicating with your employees, you can help ensure a smooth transition into the new financial year.