In this sponsored post, chartered accountant Gail Freeman explains the upcoming superannuation and tax changes. 

SIMON and Jess came to see me, keen to know if there was anything in the recent federal Budget that could affect their business.

Jess said they were particularly interested in superannuation as it was a big cost for their small business.

“Yes, there are a few changes to superannuation and tax, but not only from the Budget,” I told them.

“The first one is that the superannuation guarantee goes up to 10 per cent from July 1. It has been 9.5 per cent for the last seven years. So this needs to be factored into all your budgets and cash flows so you make sure you can afford to pay it for your employees.

“This increase has already been legislated. So it is happening on July 1. Further increases of half a per cent are scheduled every July to 2025, when it increases to 12 per cent. There are no further legislated increases.”

I told them that a really important change, which still had to pass through parliament, was that the $450 a month minimum income threshold for employees to be eligible to receive superannuation guarantee payments was proposed to be removed.

“The date this will happen is the beginning of the financial year after the legislation receives Royal assent,” I said.

“So be prepared to have to pay superannuation for all of your casuals and part time employees who earn less than $450 a month from either July 1 this year or July 1, 2022. Again, this will impact your business as you have a few employees who meet the criterion.

“While this may not impact directly on your business, there is also a proposal to increase the maximum withdrawal from the first-home savers super scheme from $30,000 to $50,000. This could be useful for your employees who are saving for a home.”

Simon said there was a lot of information to absorb, but was that the lot?

“Sorry, Simon, not quite. You need to know that the low and middle income tax office offset has been extended for an additional 12 months until June 30, 2022,” I said.

“This means that all your employees who earn between $48,000 and $90,000 will receive an extra $1080 tax refund in their 2022 tax return as they will when they lodge their 2021 tax return. When they lodge the 2021 tax return they could also get additional refunds because changes were made last year to the tax brackets.

“There are also two other incentives that have been extended for a year. Businesses with a turnover of less than $5 billion can deduct the full cost of all assets purchased including improvements to existing assets until June 30, 2023.

“This concession was supposed to end in June, 2022. Coupled with this is that the temporary loss carryback provisions have been extended for another year.

“This is not useful for a lot of businesses as it only applies to companies but for you it could be useful to use the temporary full asset expensing. Then using the temporary loss carryback means that you can buy an expensive item, make a loss for the year and then get a refund of some of the income tax you have paid in the previous two years.”

Jess said: “That’s more than enough for today, Gail! I’m looking forward to following this up at our next meeting.”

If you need guidance on the Budget, tax or superannuation contact the friendly team at Gail Freeman & Co Pty Ltd on 6295 2844, email info@gailfreeman.com.au or visit gailfreeman.com.au

Disclaimer

This column contains general advice, please do not rely on it. If you require specific advice on this topic please contact Gail Freeman or your professional adviser.

Authorised Representative of Lifespan Financial Planning Pty Ltd AFS Lic No. 229892.