Superannuation & STP2 changes

Superannuation Guarantee changes

Your payments of Superannuation Guarantee (SG) contributions for the 1^st quarter of the 2022-23 year were due 28^th October. Did you take into account the changes from 1 July 2022?

Effective 1 Jul 2022 the SG rate increased from 10% to 10.5%, and employees no longer need to earn more than $450 per month to be eligible for superannuation. Noting any employees under 18 still need to work more than 30 hours in a week to be eligible to receive superannuation contributions.

If you don’t pay your employees the correct amount of SG and it’s not paid on time, you will be required to pay the Superannuation Guarantee Charge (SGC), lodge a SGC statement and pay the SGC by 28^th November to avoid any late lodgement penalties. The SGC comprises the SG shortfall amount, an administration fee of $20 per employee per quarter, and nominal interest of 10% per annum, which is calculated from the start of the relevant quarter (i.e. 1 July 2022 for the September 2022 SG quarter).

Christmas is just around the corner, and if you will be employing ‘Christmas Casuals’ for the silly season, make sure they are set up correctly in your payroll system for the SG changes to correctly calculate and pay their SG on time.

Common errors with STP2

 STP2 has expanded the reporting requirements. While STP2 assists in reducing the reporting requirements to various government agencies, it has also enhanced the importance of reporting accurately. The main change with STP2 is the requirement to disaggregate gross amounts into the most appropriate income types. Getting this wrong can lead to incorrect information on your employees’ income statements and affect their pre-filled income tax returns, leading to incorrect calculations of certain government levies, and eligibility for government benefits and concessions. As the information is fed directly to various government agencies such as the State Revenue Offices, Services Australia, Centrelink, and Child Support Registrar, errors in reporting can turn up through data matching and lead to audits.

Are you confident your pay codes are set up correctly?

You will need to re-map your pay codes into various categories when setting up for STP2. Do you have separate paycodes in place for the items that need to be separately itemised such as the nine allowance categories?

We are assisting many employers through our ‘Payroll Health Checks’, giving more certainty their paycodes are set up correctly, accurately segregated for STP2 reporting, and the employment taxes treatment is correct. Are you correctly meeting all your PAYG withholding, Superannuation Guarantee and payroll tax obligations?

Common errors you may wish to check:

1. Remapping codes or categories when setting up for STP2.
2. Not all income paycodes have been disaggregated for both STP2 and the payroll system.
3. Incorrectly categorising allowances.
4. Incorrectly selecting ‘not reportable’ or ‘do not report to ATO’. Generally all amounts paid to employees should be reported to the ATO.
5. Misunderstanding of responsibility between employers and their Digital Service Provider – i.e. who sets up the paycodes and their applicable treatment.

How can we help?

We can undertake a payroll assurance review – our team has worked with a wide range of organisations in performing these reviews. Through this process, we incorporate a technical analysis of the applicable tax treatment for each paycode, offer recommendations, identify any risks of non-compliance, calculate any under and overpayments, and assist with any disclosures to the ATO when needed. As we go through this process, our team is also keen to point out any opportunities for improvements or efficiencies that we identify along the way.