The Australian government has announced updates to the superannuation contribution caps, effective from 1 July 2024. These changes are a result of the latest Average Weekly Ordinary Time Earnings (AWOTE) index release. Here are the details of the adjustments:

1. Concessional Contribution Cap Increase: The standard Concessional contribution cap will rise from $27,500 to $30,000. This cap pertains to the pre-tax contributions that can be made to a superannuation account, which are taxed at a concessional rate within the super fund.
2. Non-Concessional Contribution Cap Increase: The Non-concessional contribution cap, which applies to contributions made from after-tax income, will increase from $110,000 to $120,000. This cap is calculated as four times the standard Concessional contribution cap.
3. Maximum Non-Concessional Cap Increase: For those eligible under the Non-concessional contribution bring-forward provisions, the maximum cap will increase from $330,000 to $360,000. This provision allows individuals under 67 years to make up to three years’ worth of Non-concessional contributions in a single year.
4. Total Superannuation Balance Thresholds Adjustment: The Total Superannuation Balance Thresholds, which determine the maximum amount of bring-forward Non-concessional contributions available to an individual, will be adjusted accordingly. These thresholds help to limit the amount that individuals with higher super balances can contribute non-concessionally.

The increase in superannuation contribution caps, effective from 1 July 2024, means you can contribute more to your superannuation fund both before and after-tax, potentially enhancing your retirement savings. With the Concessional cap rising to $30,000 and the Non-concessional cap to $120,000 (or up to $360,000 under bring-forward rules), you have the opportunity to significantly increase your super balance. You can use this information to adjust your financial planning and contribution strategies, ensuring you maximize your superannuation benefits and tax advantages in preparation for retirement.

Plus 1 Group is here to help advise you any time. Please give us a call 0358333000 to discuss your options.

Super contribution caps to rise

The big news story for those contributing to super is that the contribution caps are set to increase from the 2025 income year.

• The concessional contribution cap will increase from $27,500 to $30,000.

This ‘CC’ cap is broadly applicable to employer super guarantee contributions, personal deductible contributions and salary sacrificed contributions.

• The non-concessional contribution cap will increase from $110,000 to $120,000.

This ‘NCC’ cap is generally applicable to personal non-deductible contributions.

The increase in the NCC cap also means that the maximum available under the three-year bring forward provisions will increase from $330,000 to $360,000.  This is provided that the ‘bring forward’ is triggered on or after 1 July 2024.

The ‘total superannuation balance’ threshold for being able to make  non-concessional contributions (and the pension general transfer balance cap) will remain at $1.9 million.

Small business concessions

The ATO has recently issued a reminder that small business owners may be eligible for concessions on the amount of tax they ultimately pay.

This depends on their business structure, their industry and their aggregated annual turnover.

For example, small business owners who have an aggregated annual turnover of less than:

• $2 million can access the small business CGT concessions;
• $5 million can access the small business income tax offset; and
• $10 million can access the small business restructure roll-over.

The ATO expects small business owners to check their eligibility each year before they apply for any of these concessions.

Furthermore, taxpayers generally need to keep records for five years to prove any claims they make.

Editor: We are always on the look-out for what tax concessions may be of use to our clients based on their individual circumstances.  These small business concessions in particular, can be very beneficial when applicable.  

FBT time is fast approaching!

The ATO has advised employers that ‘FBT time’ is just around the corner, and they need to stay on top of their fringe benefits tax (FBT) obligations.

Employers need to ensure they have attended to the following matters this FBT time:

• Identify if they have an FBT liability regarding fringe benefits they have provided to their employees or their associates between 1 April 2023 and 31 March 2024.
• Identify if they have an FBT liability as they will need to lodge an FBT return and pay the amount due by 21 May.
• Identify if they are currently registered for FBT and let the ATO know if they do not need to lodge an FBT return (Editor: by asking us to lodge an FBT non-lodgment notice) to prevent the ATO seeking a return from them at a later date.
• Employers should also remember that when the new FBT year starts on 1 April, they can choose to use existing records instead of travel diaries and declarations for some fringe benefits.

Furthermore, the ATO has released PCG 2024/2 which provides a short cut method to help work out the cost of charging electric vehicles (‘EV’) at an employee’s home for FBT purposes.

Eligible employers can choose to use either the EV home charging rate of 4.2 cents per kilometre or the actual cost.

Ultimately, all employers need to make sure they understand their FBT obligations and the records they need to keep to avoid an FBT liability.

Jail sentence for fraudulent developer

A developer who conspired to lodge fraudulent business activity statements has been convicted and sentenced to 10 years in jail with a non-parole period of six years and eight months.

The developer was involved with two companies that formed part of a group known as the ‘Hightrade Group’ which developed properties such as a hotel and golf course in the Hunter Valley, NSW.

The developer fraudulently obtained GST refunds by using three tiers of companies (developers, building companies and suppliers) to grossly inflate the construction costs of his developments.

The companies he was involved with also claimed to have purchased goods when no such purchases had occurred.  In total, the developer intended to cause a loss to the Commonwealth of more than $15 million.

His sentencing has closed a complex case, known as Operation 4.  The ATO noted that “Tax crime, like the fraud uncovered in Operation 4, affects the whole community.”

Penalties soon to apply for overdue TPARs

Businesses that pay contractors to provide certain services may need to lodge a Taxable Payments Annual Report (TPAR) by 28 August each year.

From 22 March, the ATO will apply penalties to businesses that:

• have not lodged their TPAR from 2023 or previous income years;
• have received three reminder letters about their overdue TPAR.

Taxpayers that do not need to lodge a TPAR can submit a ‘non-lodgment advice form’.  Taxpayers that no longer pay contractors can also use this form to indicate that they will not need to lodge a TPAR in the future

Avoiding common Division 7A errors

Private company clients who receive payments, benefits or loans from their private companies need to ensure compliance with their additional tax obligations (which are often referred to as their  ‘Division 7A’ obligations).

There are multiple ways in which business owners may access private company money, such as through salary and wages, dividends, or what are known as complying Division 7A loans.

Division 7A is an area where the ATO sees many errors and the ATO is currently focused on assisting taxpayers in managing their obligations when receiving payments and benefits from their private companies.

In this regard, the ATO has recommended that business owners do the following:

• keep adequate records;
• properly account for and report payments and use of company assets by shareholders and associates; and
• comply with rules around Division 7A loans.

Understanding these Division 7A obligations is essential in order to:

• make informed decisions when receiving private company money and using private company assets; and
• avoid unexpected and undesirable tax consequences.

March Update

Your employee’s super contribution is only considered ‘paid’ on the date it’s received by the super fund. Not the date it’s received by the clearing house.

In light of this, we encourage employers to make their payments at least 5-7 working days before the due date.

Payments for the September quarter (Jan through to March) are due no later than April 28th.

With Single Touch Payroll and reporting from Super Funds, the ATO is now able to identify late superannuation payments and will contact employers in breach.

Significant penalties will apply.

Payment Dates

With the ATO amnesty on superannuation payments no longer in effect, it is absolutely critical that your superannuation payments for employees are made before the due date as it can take up to a week to process.

Superannuation due dates for the remainder of the year are:

Why does it matter if I am late?

There are significant penalties and interest payable, even if you are just late by 1-2 days. This includes;

• General Interest at 10%
• Superannuation payable on all earnings (not just Ordinary time)
• Administrations fees of $20 per person per quarter
• Penalties of up to 200% of total superannuation payable for your employees
• These penalties are not tax deductible

By Law, if your payment is made late or you pay the wrong amount, you must complete and lodge a superannuation guarantee charge statement and pay the SGC charge as soon as possible.

The ATO are showing no leniency in this area. With the ATO receiving payroll information from all employers via the single touch payroll reporting, they are able to data match against the super stream records to determine any incorrect amounts or payments not made.

Failure to identify & report a late or incorrect payment will result in additional penalties being applied with these backdated to the original due date. As one employer found out just recently;

A recent case reported by the ATO identified an employer who only paid a portion of their quarterly superannuation liability on time. They paid the balance a week later. The amount paid late was $140,000. As the employer failed to also lodge a SGC report to identify & declare this, fees and penalties were applied. The payment required to be made by the Employer was just over $550,000. This was nearly 4 times the original amount due for being 1 week late.

It is critical that superannuation payments are made before the due date and for the full amount due.

Like we do at Plus 1, employers can choose to make payments more regularly, such as monthly or fortnightly to help ease the cash flow burden and reduce the risk of not paying on time.

Regardless of how payments are made, ultimate responsibility for ensuring they are paid on time, accurately and into the correct superannuation funds, always rests with the employer.

The federal government announced that from 1st July 2026 employers will be required to pay employee super contributions to the complying funds on the same day that employees are paid their wages. So, now is an opportune time to get your processes and systems in place to accommodate for these changes.

A Victorian company and its director have been fined for engaging seven unlicensed labour hire providers to source workers for orchards in the Cobram area.

The Supreme Court of Victoria issued penalties of $211,481.60 against Honey Bunny Global Pty Ltd, and $52,870.40 against director Surawadee Tanchote, after legal action by the Labour Hire Authority (LHA).

Under the Labour Hire Licensing Act 2018 (Vic), the same maximum penalties apply for engaging an unlicensed labour hire provider as apply for providing unlicensed labour hire services.

Labour hire providers who act as intermediaries and on-supply workers from other labour hire businesses must ensure they only enter these arrangements with other licensed providers, as well as ensuring they have a licence to provide labour hire services themselves.

“It’s important for labour hire hosts and providers to ensure every business in a labour supply chain holds a labour hire licence,” said Labour Hire Licensing Commissioner, Steve Dargavel.

“Under law, significant penalties can apply whether your business provides unlicensed services or engages another business to provide unlicensed services,” he said.

Honey Bunny Global and its director had cooperated with LHA investigations; in determining the penalties, the Court noted the contrition and remorse expressed by director Tanchote.

The judgement, handed down in late December 2023, came just days after a separate labour hire company in Victoria’s horticulture industry was issued the highest total penalty in Australian history for breaches of labour hire law, for knowingly and repeatedly operating without a licence.

In that case, A L Star Express Pty Ltd was penalised $617,916 for supplying workers to pick fruit and vegetables and perform other horticulture tasks in Rosebud, Koo Wee Rup, Torquay and Devon Meadows.

Horticulture work such as fruit and vegetable picking often involves the use of labour hire workers, including workers on visa programs – groups that have historically been subject to exploitation.

Providers and hosts should use LHA’s tools to ensure they only use licensed providers:

• Check the register to ensure your provider is licensed before you engage them.
• Use the Follow My Provider tool to be notified if a provider’s licence status changes.

In 2024, all employees will be able to bring legal action against their employer if the employer fails to meet its superannuation guarantee contributions (the current rate is 11% of an employee’s ordinary time earnings). Previously, this right was only available for employees covered by an award or enterprise agreement that contained the obligation on employers.

Since 1 January 2024, the National Employment Standards (NES) in the Fair Work Act 2009 (Cth) (FW Act) give employees an entitlement to superannuation consistent with superannuation guarantee laws. Therefore, where an employer complies with superannuation guarantee laws, it will also meet its obligations under the NES.

Employees can take court action under the FW Act to recover unpaid superannuation (unless the ATO has already commenced proceedings for the contributions of concern). This means that any non-compliance with superannuation obligations exposes employers, and their directors, to large financial penalties and/or imprisonment, as well as reputational damage.

However, an employer will not be exposed to risks associated with failing to make compulsory superannuation contributions if their employee has produced a superannuation guarantee employer shortfall exemption certificate.

The exemption applies to high-income earners with multiple employers. The exemption releases one or more of an employee’s employers from their superannuation guarantee obligations for up to four quarters in one financial year. However, an employee issued with an exemption certificate is still required to have at least one employer make superannuation contributions on their behalf.

To be eligible for the superannuation guarantee employer shortfall exemption certificate, an employee must:

• have more than one employer; and
• expect their mandated concessional superannuation contributions to exceed the concessional contributions cap for the financial year (currently, $27,500).

Employers are within their rights to disregard an employee’s superannuation guarantee employer shortfall exemption certificate and continue to make contributions on their behalf.