Prepare your clients' payroll for the new Australian Financial Year FY22

New financial year legislative changes fy22

It's that time of year again and as always, KeyPay is committed to taking the stress out of End of Financial Year and making year-end reporting as easy as possible for our partners and their clients.

There are a number of notable changes that will impact payroll, coming into effect on July 1 2021, which KeyPay as always will be prepared for. Here’s what you need to know for the new Financial Year:to find out if your clients fall under this category.

Closely held payees

Small businesses (with 19 or fewer employees) with closely held employees were previously exempt from Single Touch Payroll (STP) reporting for those employees. These businesses will now have to begin reporting STP data to the ATO from July 1. A closely held employee is classed as a family member, Director or Shareholder of a company. Read more on managing closely held payees with STP from July 1 2021, to find out if your clients fall under this category.

Superannuation Guarantee (SG) rate

In the new Financial Year, the legislated SG rate will increase from 9.5% to 10%. KeyPay users can rest assured that we will be applying this increase automatically for your eligible businesses, provided that you’ve configured these requirements in the system.

Tax rates and income thresholds

The Federal Budget did not result in any changes to tax rates or income thresholds for the 2021-22 financial year. The extension of the low and middle income tax offset is only claimable when individuals lodge their income tax return.

Maximum Superannuation Contribution Base (MCB)

The MCB will increase to $58,920 per quarter. From 1 July 2021, the new MCB amount will be displayed in the employee pay run defaults screen in KeyPay. Prior to that date, the system will continue to show the MCB rate applicable for the 2020-2021 Financial Year.

Genuine redundancy cap

The genuine redundancy cap has increased to $11,341 (base limit) and then $5,672 for each completed year of service;

Employment Termination Payment (ETP) cap

The ETP cap for life benefit termination payments has increased to $225,000.

Study and Training Support Loans (STSL)

STSL updates have been applied for the new financial year due to the annual indexing of the repayment income thresholds.

Award Updates

The Fair Work Commission handed down their annual wage review decision on 16 June 2021. A summary of the decision can be found here. To summarise, a 2.5% increase will be applied to the national minimum wage. The new national minimum wage will apply from your clients’ first full pay period on or after 1 July 2021. This means if your clients have a weekly pay period that starts on Mondays, the new rates will apply from Monday 5 July 2021.

This increase will also apply to the Modern Award wages, but in 3 different stages. Most awards will increase from the first full pay period on or after 1 July 2021. The increase for the General Retail Industry Award [MA000004] will apply from the first full pay period on or after 1 September 2021. The following 21 awards will increase from the first full pay period on or after 1 November 2021:

For KeyPay partners who use pre-built Modern Awards for their clients, updated versions of these award packages will be published on or before the effective increase date, with the applicable rate changes included.

If your payroll software is cloud based, these changes should apply automatically. If you have desktop software, you may have to download updates. As always, KeyPay partners are rest assured that they don’t need to do anything to begin using these new tax tables, and all new rates will automatically apply to any clients’ pay run with a date paid on or after 1 July 2021.

The new Financial Year is a great time to re-evaluate your existing processes and ensure that you’re running top-notch payroll software for your clients  for the year to come. Find out more about Australia’s leading payroll and workforce management software, and change the way you (and your clients) work and pay for FY22.

Disclaimer: The information in this article is current as at 1 June 2022, and has been prepared by Webscale Pty Ltd (ABN 70-154-693-955) and its related bodies corporate (KeyPay). The views expressed in this article are general information only, are provided in good faith to assist employers and their employees, and should not be relied on as professional advice. The Information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. KeyPay does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising either directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your own research and to seek professional advice before making any decisions or relying on the information in this article.

Kate Brown

Marketing Manager at KeyPay

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